The ever-growing landscape of crypto regulation continues to be a contentious subject, as US Congressmen Brad Sherman and Stephen Lynch have called for the implementation of tax regulations for the crypto industry in a letter addressed to Treasury Secretary Janet Yellen and IRS Commissioner Daniel Werfel. The duo highlighted the tax compliance practices in crypto, stating that the industry has been a major source of tax evasion and a significant part of the nation’s tax gap for years.
On one hand, the introduction of such regulations could serve to legitimize the cryptocurrency industry and encourage increased adoption by promoting a sense of security and accountability. The tax regulations would put crypto transactions under the same level of scrutiny and compliance as more traditional assets, which could help alleviate concerns about the potential for fraud and money laundering.
On the other hand, critics argue that the added regulations may hinder the growth of the industry and limit the potential benefits of decentralized currencies. The notion of strict tax compliance may deter some users from entering the space, as it could be seen as a barrier to entry and a potential risk when compared to the perceived anonymity that cryptocurrencies have typically provided.
The Bipartisan Infrastructure Bill, signed into law by President Joe Biden in November 2021, required taxpayers to report crypto transactions starting in 2023. However, the Congressmen pointed out that the proposed regulations have yet to be promulgated, urging for the prompt release of the proposed regulations to close the tax gap and bring the cryptocurrency industry into full tax compliance.
In May, the Biden administration renewed its push for a 30% Digital Asset Mining Energy (DAME) tax on cryptocurrency miners. The tax was first announced as part of Biden’s FY2024 budget in March 2023, but it failed to make it into the legislation that addressed raising the US debt ceiling. Some crypto proponents believe that this is only a temporary arrangement, with Coin Metrics co-founder Nic Carter suggesting that the administration would re-attempt the tax imposition into some omnibus bill in the future.
The ongoing discussion around the tax regulations for the crypto industry reflects the uncertainty that still surrounds this rapidly changing space. As the debate continues to play out, there will undoubtedly be a delicate balance to strike between fostering innovation and maintaining the appropriate level of oversight to ensure compliance and safety for all stakeholders involved.
Source: Cointelegraph
