As published on fxempire.com, Tuesday 29 March, 2022.
The budget, released on March 28, details the new provisions for taxes relating to cryptocurrency miners, institutions, and loosely termed “brokers” who are now required to report earnings to the Internal Revenue Service (IRS).
The government expects this new revenue-raising effort will reduce the federal budget deficit by more than $1 trillion over the next decade.
According to reports, the document also recommends changes to laws for taxpayers who are full-time crypto traders or dealers. $11 billion is the figure for the total projected revenue raised by these changes between 2023 and 2032. Nearly half of that has been projected for next year alone.
There are stringent income reporting rules for American citizens, and it is likely that exchanges in the country would also be required to report customer trading activities. Americans will also need to report any holdings in offshore accounts above $50,000. The Treasury stated:
“The global nature of the digital asset market offers opportunities for U.S. taxpayers to conceal assets and taxable income by using offshore digital asset exchanges and wallet providers,”
The Biden Administration will be applying “mark-to-market rules” to “actively traded” cryptocurrencies. This means that current market conditions will be used to ascertain the asset value, similar to applying taxes to unrealized gains regardless of whether the crypto assets have been sold.
As crypto demand and markets have exploded in recent years and remain above a $2 trillion market cap, they have become a lucrative source of revenue for governments. With this in mind, it is unlikely that there will be major regulatory clampdowns once this river of tax revenue starts flowing in.
The administration also projects $2 billion in additional revenue over ten years by tightening reporting requirements for foreigners and non-residents.
Uncle Sam is also seeking to spend an additional $52 million bolstering efforts to combat cyber threats, such as ransomware and misuse of cryptocurrency.
According to the document, the funding will be channeled into the Department of Justice and “enhanced response capabilities and analysis capabilities” by hiring more FBI agents. It stated:
“These investments are in line with the administration’s counter-ransomware strategy that emphasizes disruptive activity and combating the misuse of cryptocurrency.”