The new crypto tax reporting guidelines recently proposed by US President Joe Biden have drawn criticism from a number of well-known crypto experts.The Internal Revenue Service (IRS) advised brokers implement new guidelines for selling and trading digital assets on August 25 in an effort to capture cryptocurrency users evading taxes.A new form would be used by brokers to simplify tax filing and prevent tax fraud.According to the U.S. Department of the Treasury, the proposed regulations would make reporting on digital assets comparable to reporting on other assets.
However, a lot of people in the cryptocurrency ecosystem think that the strict regulations would drive the sector further away from the US.The CEO of Messari, Ryan Selkis, was one of those who reacted negatively to the news, claiming that if Biden wins reelection, the country’s cryptocurrency market will not grow.
Similarly, Chris Perkins, president of cryptocurrency venture capital firm CoinFund, believes that since other nations have advanced past the U.S., these regulations would inevitably result in less innovation entering the nation.He thinks that instead of using harsh crackdowns, the crypto business needs clear, concise standards that allow for safe innovation.
Others, meanwhile, continue to have doubts about how well the Democrats and Republicans would represent crypto interests in the US.
“I’m not confident that either party would be good for crypto. Though it definitely feels worse now than last presidency,” one user stated, as another pointed out that the new rules raise privacy concerns.
“US devotion to income tax means they can NEVER accept private transactions on public ledgers without tax and sanction surveillance.”
The Blockchain Association’s CEO, Kristin Smith, expressed concerns about the combination of traditional assets and digital asset reporting on August 25.
“It’s important to remember that the crypto ecosystem is very different from that of traditional assets, so the rules must be tailored accordingly and not capture ecosystem participants that don’t have a pathway to compliance,” Smith stated.
This comes after Biden suggested taxing cryptocurrency mining in order to reduce mining activity.According to a budget proposal dated March 9, there would be a “excise tax equal to 30 percent of the costs of electricity used in digital asset mining.”The American cryptocurrency industry has frequently expressed worries about how the country’s regulatory decisions may impact innovation.On August 13, Michael Sonnenshein, CEO of Grayscale Investments, issued a warning that the Securities and Exchange Commission’s continued use of enforcement action would force crypto businesses out of the country.
“If every crypto issue needs to go to a court of law, then as a country, we are squashing the innovation taking place here,” Sonnenshein stated.
In a similar spirit, Brad Garlinghouse, CEO of Ripple, recently suggested that the crypto business is moving away from the United States because of its longer crypto regulation process when compared to other countries like Australia, the United Kingdom, and Singapore.