A legislative proposal on tax reporting obligations now heralds the tougher regulatory efforts for the crypto market in the USA. SEC boss Gary Gensler also sees a need for action.
It is not clear to many market participants which tax regulations apply to cryptocurrencies. In many places, however, the tax authorities also lack clear regulation. US President Joe Biden now wants to put an end to this. So did the US Treasury Department a report released, which lists measures to ensure compliance with tax regulations. Its aim is to close the tax gap, i.e. to offset the difference between the taxes owed to the government and the taxes actually paid.
Some of the proposed measures are aimed at regulating cryptocurrencies. This includes, for example, the requirement that crypto exchanges report gross receipts and purchases. The report names digital currencies a “significant problem” for tax evasion. It also states that it is difficult to differentiate between illegal and legal activities involving cryptocurrencies. To increase the visibility of these transactions, banks should provide the Internal Revenue Service (IRS) with additional information about financial accounts for tax purposes. This also includes information relating to crypto transactions. The proposal aims to be enshrined in law in 2023.
Regulation not to be equated with “Bitcoin ban”
Avanti Financial Founder and CEO Caitlin Long said in light of this report that “regulatory crackdowns” have begun. But this should not be understood as a declaration of war on the crypto exchanges. A “Bitcoin Prohibition” in the US do not need to fear anyone. She said she was optimistic that the upcoming regulation would simply bring crypto laws in line with tax and corporate rules.
Meanwhile, the new SEC boss Gary Gensler has announced efforts to regulate the situation. In his speech on the 2021 Financial Industry Regulatory Authority (FINRA) Annual Conference Gensler told the virtual conference participants:
When we think about enforcement, the idea to me is pretty simple: we need rules for the road and a cop on patrol to protect everyday investors and accomplish our… mission. At the moment there is no real regulation for crypto exchanges and so there is no real protection against fraud or manipulation.
About two weeks ago Gensler suggested that a regulatory framework for crypto exchanges created by the CFTC and / or SEC would be a boon to consumer trust and protection. Gensler sees the need for action at the US Congress. There is a strong supporter of the crypto scene with Cynthia Lummis.