Just yesterday, the new tax policies announced by the US government have taken a toll on the crypto market. According to the US Treasury Department, the new policies will be to make crypto trading and holding even more transparent. The report suggests that there is a very high risk that cryptocurrency can be used to evade tax, and that might be what is happening here. This is why the new US crypto tax policies say that any transfer over $10k should be reported to the IRS. As soon as the news came out, the price of Bitcoin dropped from $42k to $38k. And then it slowly recovered as the day passed.
The US crypto tax policies
The government has said that new changes will be implemented on the 1099-INT forms that taxpayers currently use to report their interests. Exchanges should also report all inflows and outflows to the government in order to make the transactions transparent. There are new requirements for transactions made over $10000. This means that a lot of transactions that went unnoticed before will now be taxed by the government.
The government states that such transactions need to be monitored to prevent any form of tax discrepancy. The government also said that they are not able to collect taxes from wealthy earners that have complex schemes to filter taxes. The data suggests that 99% of their tax comes on wages, and that is only 45% on income made from indirect sources, and that can be hidden. Therefore, they are giving IRS the power to deal with such matters. The government also said that these indirect sources also take crypto into account.
The benefit of the government
According to the US data, the new tax laws will be important to prevent tax frauds. It will also bring in over $700 billion in the next 10 years. According to them, if the changes are accepted that they will be implemented at the start of 2023. Regulation of the crypto space also means that they will be tax individuals who are able to hide their income by using crypto.
What do you think about the new US crypto tax policies? And will they affect the market in the long run? Let us know in the comments below. Also, if you found our content informative, do like it and share it with your friends.