- The Biden 2022 Budget includes new crypto regulations.
- The budget proposal requires wider tax reporting to include crypto assets.
- Also, crypto transactions over $10,000 will need to be reported.
The first proposal aims to “expand the scope of information reporting by brokers” to include “US crypto asset exchanges and hosted wallet providers to report information relating to certain passive entities and their substantial foreign owners.”
As such, the addition would help curtail tax evasion using crypto, a problem the Treasury Department flagged in the report. In addition, the report stated that the digital nature of crypto allows taxpayers to transact offshore without leaving the country. As such, the move will allow for income from the sale or holding of cryptos to be included in the Internal Revenue Service (IRS) and other relevant parties.
Also, the budget includes a proposal to add a “comprehensive financial account reporting structure” for tax reporting. This means financial institutions will now need to provide a breakdown of user accounts detailing all transfers above $600.
The requirement includes cases where “taxpayers buy crypto assets from one broker and then transfer the crypto assets to another broker, and businesses that receive crypto assets in transaction with a fair market value of more than $10,000.”
The proposal aligns with previous reports that the Biden administration intends to increase tax for higher income brackets. However, crypto is decentralized in nature and has a diverse user base. As such, it is difficult to predict how the crypto market will respond to the news.
Notably, the crypto market is still slowly rebounding since the market crash over the last few weeks. To be specific, Bitcoin price is up 0.7% to $35,503.84, at the time of writing.