Over the past week, discussions among cryptocurrency users and industry experts centred a great deal, on how US infrastructure bill’s target to introduce series of taxations on cryptocurrency operations will affect cryptocurrency ecosystem. The bills seeks to make cryptocurrency brokers, and developers to report all profits for taxations.
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Critics of the bill termed it disastrous, while optimist believe that the bill is giving credence to adoption of cryptocurrency as a mainstream industry in financial economy.
Jack Dorsey of Twitter Inc, who offered what he termed “workable simplification” tweeted,
“Forcing reporting rules on Americans who develop software and hardware, who mine and secure the network, or who run nodes to build resilience and efficiencies, is an impossible ask that will only drive development and operation of this critical technology outside the US.”
• Infrastructure Bill and Cryptocurrency.
The $1trn infrastructure bill the US Senate approved on Tuesday, is planning to be paid through the cryptocurrency affecting tax-reporting requirements for cryptocurrency brokers, the way stockbrokers report their customers’ sales to the US Internal Revenue Service (IRS).
This could result in cryptocurrency being more tightly regulated, a push for tax compliance, the Biden administration is keen to take forward.
After weeks of much debates by US senate, the bipartisan infrastructure bill was passed in a 69-30 vote. The bill will now move to house of representatives whose final vote will seal the bill as law.
US lawmakers are divided on the topic of cryptocurrencies, with many seeing it as a mark of technological innovation linked to blockchain, the digital ledger that records transactions.
However, alarm bells ring for many top US lawmakers.
Gary Gensler, the chairman of the Securities and Exchange Commission (SEC) appointed by US President Joe Biden, called for more protection for investors in the cryptocurrency market, describing it as “rife with fraud, scams and abuse” and “like the Wild West.”
Cryptocurrency journalist, Maria Collinge reported that some cryptocurrency brokers already report transactions to the IRS, though most don’t, experts say. Brokers place buy and sell orders for users on the cryptocurrency exchanges.
The exchanges are required to collect personal identifying information from users and report their annual activity to the IRS.
The IRS defines cryptocurrency as “property” similar to stocks or gold. That means you pay capital gains tax when you sell it or cash it in at a profit.