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U.S. citizens would need to pay taxes on digital asset sales and exchanges under new tax codes.
President Biden’s administration is rolling out new regulations on the cryptocurrency sphere to crack down on widespread tax evasion utilizing the technology.
“This is part of a broader effort at Treasury to close the tax gap, address the tax evasion risks posed by digital assets, and help ensure that everyone plays by the same set of rules,” the Treasury said in a statement on Friday.
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The U.S. Treasury Department building is seen in Washington, D.C. (SAUL LOEB/AFP via Getty Images / Getty Images)
It continued, “The proposed regulations would clarify and adjust the rules regarding the tax reporting of information by brokers, so that brokers for digital assets are subject to the same information reporting rules as brokers for securities and other financial instruments.”
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Under the administration’s proposed regulations, digital asset trading platforms, crypto wallet providers, and transaction processors would all be categorized as “brokers.”
Brokers would be required to file a new form that would treat digital asset transactions similarly to more traditional financial assets.
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Physical representations of various cryptocurrencies are seen in this illustration. (REUTERS/Dado Ruvic/Illustration / Reuters Photos)
“These proposed rules require brokers to provide a new Form 1099-DA to help taxpayers determine if they owe taxes, and would help taxpayers avoid having to make complicated calculations or pay digital asset tax preparation services in order to file their tax returns,” the Treasury wrote in its statement.
It continued, “These regulations align tax reporting on digital assets with tax reporting on other assets, and, as a result, avoid preferential treatment between different types of assets.”
The U.S. Treasury is seeking comments and feedback on the proposed regulations until Oct 30. A public hearing on the issue is scheduled for Nov. 7.
Treasury Secretary Janet Yellen speaks during a press conference at the U.S. Embassy in Beijing, China. (AP Photo/Mark Schiefelbein / AP Newsroom)
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Treasury Secretary Janet Yellen has previously spoken at length about her support for regulatory oversight of cryptocurrency to protect consumers and investors.
“I see some holes in the system where additional regulation would be appropriate, and we would like to work with Congress to see additional legislation passed,” Yellen said in a June interview with CNBC.
She noted that while the Treasury Department previously identified risks associated with cryptocurrencies, the U.S. already has “strong” laws in place to protect consumers and investors.