The US government announced that it will soon announce the rules for taxing transactions with cryptocurrency. The announcement has displeased traders, but in the long term, the new regulations could strengthen the digital money trading system, Bloomberg writes.
US residents are required to pay income tax on any profits, but many crypto investors ignore this obligation. For several years now, the US Internal Revenue Service (IRS) has been notifying Americans of the need to declare profits from cryptocurrency transactions. But now the department has made it clear that control of this market is its top priority and taxes will become mandatory. The IRS said it would require crypto brokers to disclose details of transactions worth more than $ 10,000.
However, it can be difficult for traders who want to comply with the law to track their debt. Stock market brokers are already required to send tax forms to clients, but crypto exchanges remain “off the radar.” Even if firms want to help investors pay taxes, they don’t understand how to comply with current legislation. Some traders use special services to determine their debt. “Most [держателей цифровых денег] a tracking service will be helpful to help with taxes, ”said banker and crypto investor Andrew Johnson. “I believe that this [новые правила] it’s worth not manually tracking all the trades I’ve made, as this process can take hours or days, ”he added.
Cryptocurrency exchanges and other market participants are unhappy that the US Senate is introducing new rules without first consulting them. Those involved in the industry cannot predict what the consequences of an innovation will be. The rules can both attract more investors and reduce the attractiveness of cryptocurrency, destroying the aura of permissiveness.
Seward and Kissel attorney Brett Kotler believes that exchanges and fintech companies will certainly have to spend money on updating their reporting systems, but these measures will improve customer service. In addition, it is now difficult for traders to turn their digital assets into legitimate wealth due to the fact that transactions in the cryptocurrency universe remain hidden. “Cryptocurrency is a really fun party, but it’s getting late and some people start looking at their watches with their thoughts on tomorrow,” said Michael Bailey of FBB Capital Partners, a consulting firm. The accountability of transactions can also contribute to the international growth of the market. Digital money needs regulation for wider adoption in the economy.
The US government expects that taxes on cryptocurrency transactions will bring about $ 28 billion to the federal budget. This amount has already become part of a new $ 550 billion government package that will be used to develop infrastructure.
In the United States, as in many countries, there is still no clear legislative regulation regarding the digital money market. The latest regulation came out in 2014 and defines them as assets, not currencies. Profit from cryptocurrency transactions is now classified as capital gains (for those who purchase goods) or business income (for miners). That is why it is so difficult for traders to understand the intricacies of taxation.