- August 30, 2023
- Posted by: [email protected]
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The newly proposed crypto tax reporting rules by United States President Joe Biden have drawn criticism from several prominent figures within the crypto community. The Internal Revenue Service (IRS) introduced these rules on August 25th to address tax evasion within the crypto space, requiring brokers to adhere to new regulations when selling and trading digital assets. The aim is to simplify tax filing and prevent tax evasion.
While the U.S. Department of the Treasury contends that these rules bring digital asset reporting in line with reporting for other assets, many in the crypto industry fear that they will have the opposite effect, pushing innovation away from the United States.
Messari CEO Ryan Selkis expressed concerns, suggesting that if President Biden is reelected, the crypto industry may not thrive in the U.S. Chris Perkins, the president of crypto venture firm CoinFund, echoed these sentiments, emphasizing that the stringent rules might hinder innovation from flourishing within the country.
Instead of heavy-handed crackdowns, some argue for the need for clear and straightforward regulations that encourage safe innovation within the crypto sector. There’s skepticism that neither the Democrats nor the Republicans would be truly supportive of crypto interests in the U.S., with concerns that the new rules could infringe on privacy by enabling tax and sanction surveillance.
Kristin Smith, CEO of the Blockchain Association, expressed reservations about merging digital asset reporting with traditional assets, emphasizing the need for tailored regulations that account for the unique characteristics of the crypto ecosystem.
President Biden’s previous suggestion to impose taxes on crypto mining as a means to reduce mining operations has also raised concerns within the industry. A budget proposal from March 9th recommended an “excise tax equal to 30 percent of the costs of electricity used in digital asset mining.”
These developments highlight ongoing concerns within the U.S. crypto industry regarding regulatory decisions and their potential impact on innovation. Figures such as Grayscale Investments CEO Michael Sonnenshein have warned that excessive enforcement actions by the Securities and Exchange Commission could drive crypto firms out of the country. Similarly, Brad Garlinghouse, CEO of Ripple, has noted the crypto industry’s shift away from the U.S. due to the slower regulatory process compared to countries like Australia, the United Kingdom, and Singapore.
