Crypto Community Reacts to Biden’s Proposed Crypto Tax Reporting Rules

Crypto Community Reacts to Biden’s Proposed Crypto Tax Reporting Rules – The recent crypto tax reporting regulations presented by President Joe Biden have faced criticism from multiple influential voices in the cryptocurrency community. Numerous well-known figures in the cryptocurrency community express apprehensions that these actions could intensify the hesitation of crypto firms to engage in business within the United States.

On August 25th, in an effort to curb tax evasion among crypto users, the Internal Revenue Service (IRS) introduced new guidelines for brokers involved in the sale and trade of digital assets. Brokers would utilize a fresh form to simplify tax filing procedures and deter tax fraud. The U.S. Department of the Treasury indicated that the proposed regulations aim to align digital asset reporting with the reporting standards applied to other forms of assets.

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Nonetheless, a substantial portion of the cryptocurrency community holds the viewpoint that these strict regulations will result in the cryptocurrency sector distancing itself even more from the United States. Ryan Selkis, the CEO of Messari, was among those who expressed a negative reaction to this development. He remarked that should President Biden be reelected, the cryptocurrency industry’s prospects within the country would be rather bleak.

Similarly, Chris Perkins, the president of CoinFund, a cryptocurrency venture company, shares the perspective that the U.S. has fallen behind other nations, and these regulations will inevitably lead to a decrease in the influx of innovative ideas into the country. Instead of opting for strict crackdowns, he advocates for the implementation of straightforward and comprehensive regulations that foster secure innovation within the cryptocurrency sector.

However, others remain skeptical that neither the Democrats nor the Republicans would adequately champion crypto interests in the United States. “I’m not confident that either party would be good for crypto. Though it definitely feels worse now than last presidency,” one user stated, as another pointed out that the new rules raise privacy concerns: “US devotion to income tax means they can NEVER accept private transactions on public ledgers without tax and sanction surveillance.”

In an article dated August 25th, it was mentioned that Kristin Smith, the CEO of the Blockchain Association, expressed concerns regarding the integration of reporting for digital assets and traditional assets. “It’s important to remember that the crypto ecosystem is very different from that of traditional assets, so the rules must be tailored accordingly and not capture ecosystem participants that don’t have a pathway to compliance,” Smith stated.

This follows Biden’s suggestion to impose taxes on crypto mining to decrease mining operations. A budget proposal dated March 9 proposed that there would be an “excise tax equal to 30 percent of the costs of electricity used in digital asset mining.” The American cryptocurrency sector has frequently expressed its worries about regulatory decisions impacting innovation within the country. 

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In an article on August 13th, Michael Sonnenshein, the CEO of Grayscale Investments, cautioned that if the Securities and Exchange Commission continues to rely heavily on enforcement measures, it could push crypto companies to relocate from the United States. 

“If every crypto issue needs to go to a court of law, then as a country, we are squashing the innovation taking place here,” Sonnenshein stated. Ripple’s CEO Brad Garlinghouse recently noted the crypto industry’s movement away from the U.S. due to its comparatively sluggish regulatory pace, compared to countries like Australia, the UK, and Singapore.

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