A Biden administration proposal to strengthen tax compliance includes a new set of crypto IRS regulations governing transfers that seek to combat tax evasion and mirror the rules policing cash transactions.
Transfers of at least $10,000 of cryptocurrency must be reported to the Internal Revenue Service effective 2023, the U.S. Treasury said in a report released Thursday, a day after Wednesday’s crypto crash.
“Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion,” the Treasury said in a release.
“As with cash transactions, businesses that receive crypto assets with a fair market value of more than $10,000 would also be reported on,” according to the release. Comprehensive reporting is necessary “to minimize the incentives and opportunity to shift income out of the new information reporting regime,” the Treasury added, noting that cryptocurrency is a small share of current business transactions, Bloomberg reported.
Bitcoin was trading at $39,431.16 as of this writing after plunging as low as $31,926 on May 19, wiping out more than $500 billion in value. The No. 1 crypto reached an all-time high of close to $65,000 on April 15.
There’s evidence that long-term investors are buying the dip, a common phrase investors and traders hear after the price of an asset has declined in the short term. The dip is seen as a good time to buy. The question is, how long will this dip last?
Investors and traders rushed in to buy after the crash, thinking they were buying in cheaper. The Biden administration announcement of a new crypto IRS regulations plan that seeks to tax crypto transfers of $10,000 or more caught some off guard.
“Just in case you thought you were buying the dip, you were wrong,” Dare Obasanjo tweeted @Carnage4Life.
The new crypto IRS reporting regulations will go into effect in 2023 to give banks time to prepare, the Treasury said. It estimates that increased visibility into taxpayers’ accounts alone will net the IRS $460 billion over 10 years.
Some crypto stakeholders saw the announcement as a positive move because regulation is better than a blanket ban. “Can’t tax it if you ban it,” @Jedi_ant tweeted.
“If you have fraud, if you have tax avoidance, that could bring in the regulators,” The Moguldom Nation CEO Jamarlin Martin said on Episode 74 of GHOGH Podcast with Jamarlin Martin, released on April 11.
Martin spoke about crypto regulations, risk and tax avoidance on the podcast.
“It’s not whether it’s going to come, it’s essentially how is it going to come?” Martin said. “The regulations are coming to Bitcoin and the crypto complex. These regulations could impact the price where the government comes in and wants to know everything or restricts it. So that’s a risk factor to the Bitcoin investment asset. Essentially, you could have very harsh regulations come down that could really send this bubble in a spiral. It could be gradual regulations, but essentially, I believe it’s one of the important risk factors to understand.”
Ray Dalio, the founder of the world’s largest hedge fund, Bridgewater Associates, predicted that the U.S. government will ban Bitcoin.
“Regulation = more legitimacy,” @MonsteraMarket tweeted. “If you are a crypto bull you should welcome regulation. Defined rules mean bigger players get the ok to play in the space”.
Improved tax enforcement is part of Biden’s plan to pay for family benefits, including an extension of the expanded child tax credit. Because the plan doesn’t require raising taxes, it has drawn bipartisan interest in discussions about financing for investments in roads, bridges, broadband and other types of infrastructure, Wall Street Journal reported.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
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