- The US treasury has proposed that transfers of at least $10,000 of cryptocurrency be reported to the Internal Revenue Service.
- Crypto investors have viewed this as an acknowledgment by the agency that crypto is not going away.
The Biden administration has in recent months taken an interest in cryptocurrencies, specifically on taxation. In a bid to close the tax gap, and amidst growing crypto adoption in the US, the administration has been looking to get a piece of the action. This week it has been revealed that the US Treasury has proposed stricter cryptocurrency compliance with the Internal Revenue Service (IRS).
In a release, the Treasury Department said,
Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion,
The agency added that businesses that engaged with cryptocurrencies would also need to report transactions to the IRS. “As with cash transactions, businesses that receive crypto assets with a fair-market value of more than US$10,000 would also be reported on,” it added. The Treasury’s proposal also includes other resources that will enable the IRS to track and address the growth of cryptocurrencies.
The week has seen the market record huge losses and the news from the US government only makes the situation worse. It is set to frustrate new and existing investors. But some crypto investors have taken the news positively. Regulations in the space are now viewed as an admission by the government that cryptocurrencies are here to stay.
In addition, regulation will ensure that market manipulation is stamped out. Investors can also be confident with the cryptocurrencies and projects they engage with.
Market response to crypto regulation
Market leaders have in the past few months noted that regulation in the industry is long overdue. In fact, some including CZ Binance have welcomed regulation in the space.
Ripple executives have also been calling for better and clearer regulations. The company behind XRP tokens has been locked in a legal battle with the SEC on whether XRPs are securities or cryptocurrencies. The lack of clear regulations resulted in the tokens trading for more than 7 years before the SEC brought up the case.
However, some like Cardano’s Charles Hoskinson have warned that the meteoric rise of coins such as DOGE might draw strict regulations that might hinder the development of the wider crypto industry.
Although there was a brief dip in market prices following the news, prices have looked stable after the shakedown earlier in the week. Bitcoin in particular has at the time of press climbed above $40,000. The total market cap stands at $1.76 trillion and is en route to getting back above $2 trillion boosted by positive performances by low cap coins.