The budget, released on March 28, details the new tax provisions relating to cryptocurrency miners, institutions and so-called "brokers" who are now required to report earnings to the Internal Revenue Service (IRS).
The government expects this new revenue-raising effort to reduce the federal budget deficit by more than $ 1 trillion over the next decade.
According to reports, the document also recommends changes to the laws for taxpayers who are full-time cryptocurrency traders or resellers. $ 11 billion is the total expected revenue collected from these changes between 2023 and 2032. Nearly half was projected for next year alone.
The cryptocurrency tax man has arrived
There are strict income reporting rules for US citizens, and it is likely that exchanges in the country would also be required to report client trading activities. Americans will also need to report any holdings in offshore accounts above $ 50.000. The Treasury stated:
"The global nature of the digital goods market offers opportunities for US taxpayers to hide assets and taxable income using offshore digital asset exchanges and wallet providers."
The Biden administration will apply "mark-to-market rules" to "actively traded" cryptocurrencies. This means that current market conditions will be used to ascertain the value of the asset, similar to applying taxes to unrealized gains, regardless of whether the crypto assets have been sold.
As the demand and markets for cryptocurrencies have exploded in recent years and remain above a $ 2 trillion market cap, they have become a lucrative source of revenue for governments. With that in mind, it is unlikely that there will be any major regulatory restrictions once this torrent of tax revenue begins to flow.
The administration also expects $ 2 billion in additional revenue over ten years by tightening reporting requirements for foreigners and non-residents.
Fighting the abuse of cryptocurrencies
Uncle Sam is also looking to spend an additional $ 52 million to bolster efforts to combat cyber threats, such as ransomware and cryptocurrency abuse.
According to the document, the funding will be channeled into the Department of Justice and "improved response and analytical capabilities" by hiring more FBI agents. He stated:
"These investments they are in line with the administration's strategy against ransomware which emphasizes disruptive activity and the fight against the misuse of cryptocurrencies ”.