Biden Administration Proposes a Crackdown on Crypto Reporting in Tax Enforcement Plan

President Joe Biden’s new tax plan, among other proposed regulations from US government agencies, requires a reporting of crypto assets from investors.

Crypto Crackdown 

Over the last month, news broke of President Joe Biden’s American Family Plan, which looks to support low-middle class families with child care and health care coverage. Yet the American Family Plan is now important in the crypto space. This is because cryptocurrency was named as an asset that the government looks to crack down. How will they crack down on crypto? By implementing taxes and reporting.

There are a multitude of reasons why the US government wants to tax crypto. The tax plan against crypto would, they hope, stop money laundering, tax evasion, and at the same time help fund Joe Biden’s American Family Plan. 

Another reason they wish to tax crypto is because as written in the American Family Plan, “cryptocurrency transactions are likely to rise in importance in the next decade.”

 The Biden administration believes that cryptocurrency will continue to grow over the coming years and hopes to implement a taxing system now to get ahead of the curve.


Reporting Crypto Assets

The Biden administration hopes to bring new regulations into play for crypto investors. The reporting of crypto assets by crypto investors and then the taxing of reported assets is the method the Biden administration hopes to enact to achieve their goals. The Treasury Department’s General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals published in May states that:

“The proposal would require brokers, including entities such as U.S. crypto asset exchanges and hosted wallet providers, to report information relating to certain passive entities and their substantial foreign owners when reporting with respect to crypto assets held by those entities in an account with the broker.”

The Biden administration looks to eradicate the anonymous nature intrinsically tied to crypto by having exchanges and wallet providers report information on investors and holders. Another rule in the General Explanations of the Administration’s Fiscal Year 2022 Revenue Proposals would require businesses to report crypto transactions worth more than $10,000. 

The proposal provides clarity, stating: “Separately, reporting requirements would apply in cases in which taxpayers buy crypto assets from one broker and then transfer the crypto assets to another broker, and businesses that receive crypto assets in transactions with a fair market value of more than $10,000 would have to report such transactions.”

 This means businesses and holders of crypto will be asked to report any crypto transaction, including exchanges, over $10k.

Concluding Thoughts 

The Biden administration looks to begin implementation of regulation aimed at crypto to rid bad actors out of the finance industry. The crypto community may feel the incursion brought by the Biden administration as a bad sign, but others feel differently. Some argue that by regulating crypto, it may help legitimize the asset further for those who continue to be skeptical or not interested. If the currency does become regulated, it may also incentivize those fearful or skeptical of crypto to now invest, seeing as the currency is understood as an asset by the US government. Time will tell whether or not the regulation of crypto will help or hurt the crypto market.

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