[NEWS] Biden Administration unveils new regulatory proposal to combat cryptocurrency tax evasion

On the 25th, the US Treasury Department announced a new proposed regulation on the buying, selling and exchanging of digital assets such as cryptocurrencies.

The regulation aims to prevent tax evasion and imposes reporting obligations on brokers such as cryptocurrency exchanges and settlement businesses to the IRS (Internal Revenue Service). Such brokers will be subject to the same reporting obligations as brokers of securities and other financial products.

The definition of a broker includes centralized cryptocurrency exchanges, decentralized exchanges such as DeFi, and cryptocurrency settlement businesses.

If this regulation is implemented, brokers will be required to send a new tax report, "Form 1099-DA," to the IRS as well as to users who hold digital assets.

The US Treasury Department explains that this initiative will have the benefit of cracking down on tax evasion and making it easier for taxpayers to understand the taxes they are paying.

According to the bipartisan Joint Committee on Taxation (JCT), the implementation of this regulation could bring in $28 billion (about 4.1 trillion yen) in tax revenue over the next 10 years.

Public comments will be accepted until October 30th, and the first public hearing is scheduled to be held on November 7th. The US Treasury Department aims to apply this regulation in 2025 in line with the 2026 tax payment.

The Biden administration has proposed a cryptocurrency reporting requirement to be included in the Infrastructure Investment and Jobs Act of 2021, and this proposed regulation is related to that.

The proposal also included an obligation for the recipient to report transactions when cryptocurrency transfers exceeding $10,000 (approximately 1.46 million yen) are made to another business. The proposed regulation announced by the Treasury Department imposes a reporting obligation on transactions exceeding $10,000 not only for cryptocurrency but also for a wide range of digital assets.

On the other hand, some in the cryptocurrency industry have expressed negativity towards this proposed regulation.

Miller Whitehouse-Levine, CEO of the DeFi Education Fund, which engages in DeFi lobbying, told Reuters, "The proposed approach will not make tax easier or compliant."

He then criticized, "Not only is this proposal confusing, it is also a contradictory and misguided approach that seeks to apply a regulatory framework to brokers in places where they don't exist, assuming they exist."

In addition, House Financial Services Committee Chairman Patrick McHenry (R-Calif.) said in a statement, "This is part of the Biden Administration's continuing attack on the digital asset ecosystem," and "The Biden Administration should stop these misguided attempts to decimate the U.S. digital asset ecosystem and work with Congress to provide clear rules for the industry."

Source:Announcement,Reuters
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