In a surprise amendment to a massive bipartisan US infrastructure bill, senators have moved to collect tax on cryptocurrency – requiring transactions of more than $10,000 to be reported to the IRS.
With the amendment approved, the bill will now be presented to the House of Representatives and the US Senate where it could soon be written into law.
The new bill will focus on businesses – such as centralised exchanges (CEX) – creating a legal obligation for them to report transactions of more than $10k on their platforms to the Inland Revenue Service (IRS).
$10,000 transactions are already the standard threshold for IRS reporting requirements, so this latest proposal can be seen as an extension of the information reporting regime into the crypto space.
This follows a Treasury publication earlier in the year that suggested tax-enforcement on crypto assets were necessary in order “to minimise the incentives and opportunity to shift income out of the reporting regime”.
However, the real catalyst for this legislation has been a desperate need to fill a funding gap in the new $550 billion national infrastructure plan, which aims to modernise America’s aging transport and power grid systems.
The IRS has been examining crypto for a while. Last year it added a line about cryptocurrency to its individual tax returns.
Many leaders in the industry have already begun to push back against the new proposals, seeking to build congressional support against a policy that sees crypto as a cash cow.
“It’s hugely problematic – we’re pushing every lever right now to change it,” said Kristin Smith, Director of the Blockchain Center.
However, some industry leaders have welcomed the new tax proposals, pointing out the bill could form a level of protection for cryptocurrency.
“This is long-term super positive, as much as taxes suck,” said Robert Leshner, Founder at Compound Labs.
“Once the US government realises that crypto can pay for infrastructure, it’s going to be less tempting to squash it.”
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