According to the new proposal, the crypto companies should report crypto as cash when it comes to large transactions.
The U.S. Treasury released a report that outlined the Biden administration’s tax compliance plan. According to it, the crypto businesses may be required to provide information for the transfers over $10K to IRS.
The Treasury is concerned that cryptocurrency “already poses a significant detection problem by facilitating illegal activity broadly including tax evasion”. The departments reported acknowledging that the crypto market has grown rapidly during the last year. The current market cap of $2T needs to be watched closely according to the administration. They also believe that “cryptocurrency transactions are likely to rise in importance in the next decade”.
One of the reasons for the move could be the fact that it becomes very hard for the IRS to find and investigate people who don’t pay taxes for using crypto. With modern technology, the agency said that it is much easier to cover your taxable fingerprints. On the other side, the agency doesn’t have the needed technology.
“This is because the IRS operates outdated systems and lacks the ability to fully take advantage of the benefits of more modern technology due to its resource constraints.”
Bitcoin is the largest cryptocurrency by market cap. However, the risks of investing in BTC are not as low as we thought. During the last two weeks, Bitcoin went to its highest drop for the last year. The price went more than 50% down compared to its ATH at $64 000. Even though many crypto believers saw the opportunity to invest even more in the cryptocurrency and the price went to more than $40K.
According to Neeraj K. Agrawal, director of communications at crypto advocacy group Coin Center, “Cryptocurrencies work like cash so it’s not surprising that they will be treated like cash.”
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