Crypto Tax Report Rules: US Senators Propose Bill To Protect Developers
As the cryptocurrency industry reaches bigger landmarks, the government has given more attention to it. This has led to an increase in the rules and regulations concerning cryptocurrency taxation and use. The US President, Joe Biden, is now set to sign infrastructure legislation that impacts the cryptocurrency industry in several important ways.
The legislation will require senders involved in cryptocurrency transactions above $10,000 to submit their personal information to the IRS. The provision was made in September having previously applied only to cash transactions, but will now apply to every financial transaction across all markets.
But two US Senators, Senators Ron Wyden, and Cynthia Lummis, have proposed a bill to amend the requirement. The two Senators want the legislation to exclude blockchain developers who create exchange, wallets, and blockchain projects.
The Tax Report Rule Affects Crypto
The $1 trillion legislation has gone through many months of intense debate before reaching the desk of the President. The legislation has been debated over and over as Senators took opposing opinions. The legislation has also received widespread condemnation from the crypto community as they argued that it would severely stifle the growth of the industry since it would affect crypto miners, blockchain developers, and the entire crypto community in general.
For an industry that thrives on privacy and has a trillion-dollar market cap, the crypto industry will be severely impacted if users are mandated to reveal their personal information for transactions above $10,000. Although it is a welcome development for preventing fraud and money laundering. To stave off the bill, some lobbyists came close to modifying it but a late security issue put paid to their efforts.
But the two Senators have proposed a bill to narrow the people that will be affected by the legislation if passed. If accepted, the crypto community will breathe a bit easier knowing that creators and developers, who typically move large amounts of cryptocurrencies, will retain their privacy status.
Crypto Regulations May Increase
Although more people are calling for the government to help grow the crypto industry, there are signs that the government might impose further regulations to keep crypto transactions firmly under the government’s control.
Last week, the Securities and Exchange Commission (SEC) rejected the Bitcoin spot-ETF application submitted by Van Eck, a popular investment management firm. The move was particularly important as it revealed the government’s dispositions towards cryptocurrencies; it can be inferred that the SEC is unwilling to grant approval to any trading instrument that seeks to track Bitcoin directly. The SEC cited the risk of being used for fraud and manipulation as the reason why it rejected the spot-ETF application.
But some experts say that the SEC is aware that Bitcoin futures-ETFs carry more risk than the spot-ETF and that its refusal to approve the spot-ETF speaks volumes about the government’s stance on crypto exposure to investors.
Despite these, the SEC still invites the crypto community to dialogue to find mutually-beneficial positions on cryptocurrencies.
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