Several prominent cryptocurrency commentators have criticized new cryptocurrency tax reporting rules recently introduced by United States President Joe Biden.
On August 25, to catch cryptocurrency users evading taxes, the Internal Revenue Service (IRS) suggested that brokers follow new rules for selling and trading digital assets. Mediators will use a new form to make it easier to file taxes and prevent tax fraud.
The US Treasury indicated that the proposed rules would make reporting digital assets similar to reporting other assets.
However, many in the cryptocurrency community believe that the strict rules will push the cryptocurrency industry away from the United States.
Messari CEO Ryan Selkis was among those who responded negatively to the news, saying that if Biden wins re-election, the country’s cryptocurrency industry will not thrive.
There is no future for cryptocurrency in the United States if Biden is re-elected. I’m sorry.
Go outside, recruit Newsom and hope for the best, or vote Republican where at least we know the top three candidates are less egregious on this issue.
Cryptocurrency has always been political.
have a nice weekend.
– Ryan Selkis (@twobitidiot) August 25, 2023
Likewise, Chris Perkins, head of cryptocurrency venture firm CoinFund, argues that other countries have gotten ahead of the US, and that these rules will inevitably lead to a decrease in the flow of innovation into the country.
Rather than resorting to harsh crackdowns, he believes that simple and detailed rules are needed to allow safe innovation across the cryptocurrency industry.
To be clear, I agree that other jurisdictions have taken the lead and that the United States has unfortunately lagged behind. We need proactive and careful policies that encourage and unlock responsible innovation across the cryptocurrency sectors. Clarity is coming, one way or another. Sharing time…
— Christopher Perkins NYC (@perkinscr97) August 26, 2023
Meanwhile, others remain skeptical that neither Democrats nor Republicans will adequately defend cryptocurrency interests in the United States.
“I’m not sure either side will be good for cryptocurrency. Although it certainly looks worse now than in the previous presidency,” stated one user, while another noted that the new rules raise privacy concerns:
“The US’s compliance with the income tax means that it can never accept private transactions into the public ledgers without monitoring taxes and penalties.”
And on Aug. 25, Cointelegraph reported that Kristin Smith, CEO of the Blockchain Association, expressed reservations about merging digital asset reports with traditional assets.
“It is important to remember that the cryptocurrency ecosystem is very different from that of traditional assets, so the rules should be designed accordingly and not trap ecosystem participants who have no path to compliance,” Smith stated.
This comes after Biden proposed taxing cryptocurrency mining to reduce mining operations.
The budget proposal dated March 9 suggested that there would be a “excise tax equal to 30 percent of the costs of electricity used to mine digital assets.”
The cryptocurrency industry in the United States has repeatedly expressed concerns about regulatory choices affecting innovation within the country.
On August 13, Grayscale Investments CEO Michael Sonnenstein warned that the SEC’s continued use of enforcement actions will drive cryptocurrency companies out of the country.
“If every case related to cryptocurrency needs to go to a court of law, then as a country, we are crushing the innovation that is happening here,” Sonenshine stated.
In the same vein, Ripple CEO Brad Garlinghouse recently noted that the cryptocurrency industry is shifting away from the United States due to the slower cryptocurrency regulation process compared to other countries such as Australia, the United Kingdom, and Singapore.