EDITOR NOTE: As part of the $1 trillion infrastructure bills that are rapidly making their way through Congress, the U.S. government is working on plans to tax cryptocurrency as one way to pay for these gigantic spending plans. To tax digital currency, the government has to track digital currency, taking away its anonymity and security, which are two of its biggest benefits. These crypto taxes will be combined with giving more power to the IRS. It will allow the agency to go after an individual’s wealth if they feel they are not paying their fair share in taxes. The infrastructure bills are supposed to build new roads and bridges. However, what they are secretly doing is giving the government more power to go after individual wealth.
What does Bitcoin have to do with roads and bridges?
Much is happening in the US Congress today. One way legislators propose to pay the $ 1 trillion infrastructure bill approved by the Senate on Tuesday is to impose tax filing requirements on cryptocurrency brokers. This is how the stock broker reports the customer’s sales to the IRS. It could pave the way for tighter regulation of cryptocurrencies — it’s something the Biden administration is heading for as it also promotes tax compliance.
Parliamentary accountants estimate that the plan could generate about $ 28 billion in revenue over a decade.
$ 28 billion can grow very rapidly. Take a bridge as an example. According to the Federal Highway Authority, replacing all bridges in countries that are classified as structurally defective will cost an estimated $ 25.6 billion.
Therefore, currencies that cannot be held will effectively pay for roads, bridges, water systems, Internet broadband access, and power grid enhancements. This is what President Joe Biden called a “generational investment” equivalent to the construction of a transcontinental railroad. Interstate highway system in the 1800s or 1950s. This is evidence of the explosive growth of cryptocurrencies in recent years (an attractive potential source of income) and the growing impetus of some government officials to put new reins on less regulated markets. ..
After weeks of controversy, the Senate passed a bipartisan infrastructure package with 69-30 votes. Now move to the house.
Look at the situation:
What is the cryptocurrency story?
The cryptocurrency market has swelled to an estimated $ 1.8 trillion. These are basically lines of digitally signed computer code each time you move from one owner to the next. Users can spend and receive money anonymously, regardless of bank or government. This appeals to libertarians, off-the-grid types, and risky millennials who believe their financial system is fraudulent.
However, it is also endorsed by international criminals, money launderers, drug dealers and ransomware hackers.
The most widely traded cryptocurrency is Bitcoin, which is now worth about $ 45,000 each, starting from its April high of about $ 64,800. It’s notoriously volatile, and in some cases soars or plunges into a public announcement by provocative Tesla CEO Elon Musk. Currently, some companies accept Bitcoin as a payment. Other well-known cryptocurrencies include Ethereum, Dogecoin, Ripple and Litecoin. Anyway, there are thousands. Bitcoins and other items can be bought and sold in exchange for US dollars and other currencies.
Where are government officials standing?
On both sides of the coin.
Some lawmakers see cryptocurrencies as a font of innovation, especially in the development of blockchain, a digital ledger that records transactions.
Meanwhile, top US regulators are showing signs of danger. Gary Gensler, chairman of the Securities and Exchange Commission appointed by Biden, said last week that investors were “full of fraud, fraud and abuse” and “like the Wild West” with more protection in the crypto market. Said it was necessary. The SEC has won dozens of proceedings against crypto fraudsters, but Gensler said authorities need more authority and more money from Congress to regulate the market. rice field.
Meanwhile, the Federal Reserve is considering developing its own digital currency fixed to the US dollar. So-called digital dollars have the potential to enable faster payments between banks, consumers and businesses.
“Some federal agencies aren’t discussing on the same page,” says Suzanne Lynch, a professor at Utica College who focuses on financial crime. “It’s very gray now.”
What is the relationship with the infrastructure bill?
The cryptocurrency debate began in the middle of the Senate’s work on a large infrastructure package. The Republican Party’s opposition to expanding the scope of government agencies rejected previous plans to pay the bill by strengthening IRS enforcement to crack down on tax fraud by individuals and businesses. That would have brought an estimated $ 100 billion over a decade.
Returning to the plan to make money, the plan hatched due to the stricter tax filing requirements of cryptocurrency brokers. The estimated $ 28 billion it will generate in 10 years is only about a quarter of what the IRS crackdown proposal envisioned. But it is still the largest source of income for some of the infrastructure bills.
It raised dissenting opinions from some senators and unleashed opposition lobbying from the cryptocurrency industry and Internet freedom advocates.
According to opponents, the provision broadly defines brokers, software developers and cryptocurrency “miners” (verifying other users’ transactions and lending computing power to receive coins in exchange to create coins. It says that it can hinder innovation by improperly imposing new tax filing obligations on (users). Opponents say these people do not have access to the cryptocurrency user data that the IRS collects.
Opponents submitted amendments to the clause, and a compromise emerged. However, it failed to get Senate approval and pushed the House to discuss cryptocurrencies, taxes, and brokers.
What is the current status of cryptocurrencies and taxes?
Experts say that some cryptocurrency brokers have already reported transactions to the IRS, but few have. The broker places a user buy / sell order on the cryptocurrency exchange.
The exchange needs to collect personally identifiable information from users and report its annual activity to the IRS.
The IRS defines cryptocurrencies as “property” similar to stocks and gold. That means you pay capital gains tax when you sell it or monetize it with profits.
Original post from Texas News Today