United States: cryptocurrency taxation on the menu of a new bill
At the start of August, the cryptocurrency industry was in turmoil in the United States. In question, the Infrastructure Bill, the huge stimulus plan to 1,200 billion dollars, including an amendment forcing many players in the sector. Thus, DeFi players may have to file tax returns with the Internal Revenue Service (IRS).
After a complex period of negotiations, the contentious amendment was adopted because a senator opposed the hard-won compromise. The sector then thought to be “quiet” until the discussion of the recovery plan in the House of Representatives in the fall. It was without counting on a new bill.
Like the sequel to a novel, the US Treasury returns with the $ 3.5 trillion Reconciliation Bill, which is aptly named for cryptocurrencies. Because no, it is not a question of hanging on to the branches, but rather of cutting the trunk of the tree on which the actors of the sector are sitting.
Target foreigners registered on American exchange platforms
According to a member of the Biden administration who prefers to remain anonymous, the US Treasury would like to require US-based exchanges, such as Coinbase, Kraken or FTX, to report data from non-users to the IRS. -Americans.
This information would be exchanged with other countries, which could then ensure that their tax residents have declared their capital gains to the local tax authorities. Coin Center executive director Jerry Brito shared the information on Twitter:
Treasury wants to add more crypto reporting requirements in the reconciliation bill, according to this report. 🤦🏻 https://t.co/umQy78BiYs pic.twitter.com/2kWvSoBT1L
– Jerry Brito (@jerrybrito) August 30, 2021
However, the Reconciliation Bill is far from being passed definitively. Republicans appear to be opposed to the bill as a whole and the vote of the fifty Democratic senators would then be required.
However, since the events of August concerning the other stimulus plan, we know that some Democratic senators, like Ron Wyden, are on the side of the cryptocurrency sector.
Certainly, cryptocurrencies would only be a drop in the bucket in the Reconciliation Bill. But we already know that the contested proposal would not be voted that easily.
What is certain is that the Biden administration is clearly putting pressure on digital assets, both on industry players and crypto-asset owners. The difference is that, this time around, this proposal would explicitly target non-Americans.
👉 Find all the news on the regulation of crypto-assets
The United States would like to catch the big wallets
The reason is simple: the US Treasury is already exchanging certain information with other countries so that cryptocurrency holders pay their taxes when they owe them. But the Treasury seems convinced that the big fish are making complex legal arrangements, including offshore companies, in order not to pay taxes.
It would therefore be a give and take: on the one hand, Americans report non-Americans registered on American platforms; on the other hand, the other countries report the information necessary to allow the Treasury to bring up these big fish.
👉 To read – Taxation of gains in crypto-assets: the situation in France in 2021
The taxation of cryptocurrencies: a sensitive subject in the United States
Let us be clear: the Reconciliation Bill is a legislative juggernaut, both financially and in terms of the measures planned. Cryptocurrency is not the priority of the Senator or even the Biden administration.
In any case, this administration has already, on several occasions, openly spoken of more severe regulation of the digital asset sector. The severity would be seen in particular on the tax side and the amendments voted or discussed are all related to taxation and declarations to the IRS.
The Biden administration therefore seems clearly to lean towards regulators reluctant to help players in the sector, as we can see in Europe and particularly in France. It follows the same guideline as the FATF, which has always wanted to crack down on the cryptocurrency sphere. Case to follow in the United States.
👉 On the same subject – FATF Guidance: a potential strengthening of constraints for DeFi players
Receive a recap of crypto news every Sunday 👌 And that’s it.
About the author: Benjamin Allouch
Lawyer specializing in digital law and personal data. He quickly became interested in bitcoin and blockchain technology, and founded the blog bitcoin-blockchain.fr. He is interested in the emergence of blockchain law and the legal consequences of this technology.
All articles by Benjamin Allouch.