The future of the cryptocurrency industry in the United States is tied to developments in tax and regulatory laws, and the success or failure of this industry depends on the impact of these measures
Biden’s Hand in the Pockets of Cryptocurrency Users
In recent years, with the expansion of cryptocurrencies as one of the emerging and important technologies in the world of finance, tax measures and regulations related to them have increasingly attracted the attention of governments and financial authorities globally. In this context, the actions of the U.S. government under President Biden have been scrutinized as one of the key issues. Following the introduction of new tax guidelines by the U.S. Treasury Department, criticisms and concerns about the impact of these measures on the cryptocurrency industry and its users have risen.
In this article, we will examine the wave of dissatisfaction among users and experts regarding the performance of Joe Biden’s administration after the introduction of new tax guidelines for cryptocurrencies. We will review the criticisms and concerns about the future of the cryptocurrency industry in the U.S. Additionally, various viewpoints, including critiques and support for the new tax measures, will be assessed.
U.S. Hand in the Pockets of Cryptocurrency Users
On Friday, August 25, 2023 (corresponding to Shahrivar 3, 1402 in the Iranian calendar), a directive was issued under a proposed law from the U.S. Treasury Department requiring cryptocurrency brokers, including exchanges and crypto payment processors, to report new information about the sale and exchange of digital assets to the U.S. Internal Revenue Service (IRS).
For some time, the U.S. has adopted a strict stance toward cryptocurrencies, and this measure is the latest regulation aimed at further limiting the industry within the country. This directive can be seen as part of a broader push by Congress and regulatory authorities to control—or as some critics argue, suppress—cryptocurrency users who may be failing to properly pay their taxes.
In its statement, the Treasury Department announced that the newly proposed tax reporting form is designed to help taxpayers and assist cryptocurrency users in avoiding complex calculations to determine their gains.
Additionally, the Treasury stated that digital asset brokers, like other financial brokers, are now required to report similar information to the IRS, meaning there will be no difference in reporting standards between these brokers going forward.
According to this definition, a “broker” includes both centralized and decentralized digital asset trading platforms, cryptocurrency payment processors, and online crypto wallets where users store their digital assets. This law applies to all digital currencies like Bitcoin, Ethereum, and non-fungible tokens (NFTs).
These new requirements stem from the $1 trillion Infrastructure Investment and Jobs Act of 2021, which aimed to increase tax reporting obligations for digital asset brokers.
Under the new directive, which will take effect in 2025, all digital asset transactions exceeding $10,000 must be reported by brokers to the IRS. When this law was passed, it was estimated that the new regulations would generate close to $28 billion in revenue for the U.S. over a decade.
“This decision is part of the Treasury Department’s broader effort to reduce the tax gap, address the risk of tax evasion arising from digital assets, and ensure the equitable enforcement of tax laws for everyone.”
The IRS currently requires cryptocurrency users to report many activities related to these assets, regardless of whether those activities resulted in a profit. At present, users must calculate these themselves, as platforms facilitating the exchange of digital assets do not provide this information to the IRS.
This directive has faced criticism from the cryptocurrency community, and both the IRS and the Treasury are expected to receive feedback and proposals by October 30, with a hearing scheduled for November 7 and 8.
A Wave of Dissatisfaction Among Users Regarding Biden’s Performance
After the U.S. Treasury Department introduced these new tax guidelines, a flood of criticism was directed at the Biden administration’s handling of cryptocurrency regulations. Many leading cryptocurrency experts are concerned that tightening tax and regulatory laws in the U.S. will have negative consequences for the crypto market, eventually discouraging crypto companies from operating in the country. Many in the crypto community believe that these strict regulations, combined with recent news from China—where a court has ruled that digital assets are legal—will push the U.S. into a corner.
Ryan Selkis, CEO of Messari, was one of the first to react to the news, stating that if Biden wins the next election, the crypto industry in the U.S. will collapse.
“If Biden is re-elected, there’s no future for crypto in the U.S. Sorry. Move abroad or vote for Newsom or the GOP and hope for the best. Crypto has always been tied to politics. ”Tweet by Ryan Selkis, CEO of Messari – August 25, 2023
Chris Perkins, the head of the crypto venture capital firm CoinFund, also believes that other countries are ahead of the U.S. and that these regulations will inevitably stifle innovation in the country. He argues that instead of resorting to heavy-handed crackdowns, simple and clear regulations are needed that allow for safe innovation across the crypto industry.
“I agree that other jurisdictions have taken the lead, but unfortunately, the U.S. has fallen behind. We need proactive and nuanced policies that pave the way for responsible innovation across the crypto industry from the top down. Transparency is coming in any case. It’s also time for engagement…”
At the same time, many crypto experts and enthusiasts believe that neither the Democrats nor the Republicans are fully supportive of cryptocurrency interests in the United States.
A Twitter user commented: “I’m not sure that either party is good for crypto. But I am sure now that Biden has done the worst damage to crypto. The U.S.’s obsession with income tax means they will never accept private transactions on public ledgers without taxation and sanction oversight.”
Kristin Smith, CEO of the Blockchain Association, gave an interview to Cointelegraph on August 25, discussing the integration of digital asset tax reporting with traditional assets.
In the interview, Smith stated: “Keep in mind that the crypto ecosystem is very different from traditional assets, so the regulations should be adapted accordingly, and users of this ecosystem should not be forced to comply with traditional regulations.”
Miller Whitehouse-Levine, CEO of the DeFi Education Fund, also expressed concern, saying that this proposed approach neither simplifies tax reporting nor improves tax compliance.
“The IRS’s proposal is confusing, self-defeating, and incorrect. They are trying to impose intermediary-based regulatory frameworks where no intermediaries exist. ”Miller Whitehouse-Levine, CEO of the DeFi Education Fund
Representatives at War with the People
Interestingly, the majority of senators and congressional representatives have expressed support for the proposed legislation.
Several Democratic senators, including Elizabeth Warren, urged the Treasury Department in a letter to swiftly implement the regulations, arguing that without quick action, crypto tax evasion and intermediaries “will continue to play with the system.”
Brad Sherman, a U.S. Congressman, also reacted to the newly proposed rules by writing a strongly worded letter to relevant authorities, expressing concern over tax evasion.
“Cryptocurrencies mean ‘hidden money,’ and their exact purpose is to remain hidden. I’m pleased that the U.S. Treasury is proposing regulations that will require crypto platforms to report their customers’ transactions—something that Stephen Lynch and I called for earlier this summer. ”Brad Sherman, U.S. Congressman
Final Thoughts
The dissatisfaction of users and professionals in the cryptocurrency industry with the new U.S. tax measures has had a significant impact on the crypto market and its ecosystem. These frustrations stem from concerns that tightening tax and regulatory laws will negatively affect flexibility and innovation in the industry, potentially leading to companies and users moving their operations outside the U.S.
On the other hand, U.S. congressional representatives have expressed concerns about tax evasion and the potential misuse of cryptocurrencies, requesting the government to implement precise and effective tax regulations for this market as soon as possible.
Despite this, debates and concerns about the impact of these measures on the cryptocurrency market continue. Some believe that strict tax and regulatory laws could stifle innovation and growth in this industry, potentially harming the U.S. in its competition with other countries. At the same time, others argue that well-enforced tax regulations could lead to a more structured market, prevent abuse, and promote economic growth.
In conclusion, the future of the cryptocurrency industry in the U.S. is clearly tied to developments in tax and regulatory laws, and the success or failure of this industry will largely depend on the impact of these measures.
