• The Biden administration is calling for banks and crypto exchanges to report transactions to the Internal Revenue Service.
  • In a bid to reduce the tax gap, the Treasury is requesting the reporting of digital asset transfers of over $10,000.
  • Under the proposal, payment service accounts that accept digital currencies would also be covered. 

United States President Joe Biden is allocating more funding to the Internal Revenue Service (IRS) to apply traditional standards to crypto exchanges. 

Crypto to rise in importance in the next decade

According to the president's tax compliance measures, the United States Department of Treasury is cracking down on tax evasion involving digital assets.

In the published report by the Treasury, one of the proposals requires “increased information reporting,” explaining that financial accounts will be subject to additional visibility of gross receipts and expenses to the IRS. 

The reporting regime would cover foreign financial institutions as well as cryptocurrency exchanges and custodians. With $2 trillion in market capitalization, the report highlighted:

Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion.

The proposal also noted that although cryptocurrencies constitute a relatively small portion of business income today, digital asset transactions are likely to rise in importance in the next decade. 

The Treasury calls for transactions related to cryptocurrency transactions greater than $10,000 to be reported to the IRS. As part of the new regime, banks, crypto exchange accounts and payment services that accept the new asset class would also be covered. 

Currently, the IRS does not have any independent verification of crypto-related transactions, which is potentially leading to a widening tax gap. The Treasury will require businesses to report more information on their inflows and outflows from accounts each year starting in 2023. 

The report added:

Financial institutions house a lot of valuable information, and indeed already provide third-party reports to the IRS. Leveraging this information – rather than introducing new requirements for taxpayers – is a proven way to improve compliance.

83.6% of taxes were paid voluntarily and on time from 2011 to 2013, according to data from the IRS in October 2020. The Treasury Department reports that the tax gap could reach around $7 trillion in the next 10 years. The new proposal aims to reduce this gap by 10%, as the government would be able to audit companies with any tax discrepancies more effectively. 

Bitcoin price fell 5% after the proposal was announced following China’s regulatory crackdown on cryptocurrencies a day earlier.


Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Recommended content


Recommended Content

Editors’ Picks

Bitcoin Weekly Forecast: BTC nosedives below $95,000 as spot ETFs record highest daily outflow since launch

Bitcoin Weekly Forecast: BTC nosedives below $95,000 as spot ETFs record highest daily outflow since launch

Bitcoin price continues to edge down, trading below $95,000 on Friday after declining more than 9% this week. Bitcoin US spot ETFs recorded the highest single-day outflow on Thursday since their launch in January.

More Bitcoin News
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers

Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers

Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins. 

More Bitcoin News
Solana Price Forecast: SOL’s technical outlook and on-chain metrics hint at a double-digit correction

Solana Price Forecast: SOL’s technical outlook and on-chain metrics hint at a double-digit correction

Solana (SOL) price trades in red below $194 on Friday after declining more than 13% this week. The recent downturn has led to $38 million in total liquidations, with over $33 million coming from long positions.

More Solana News
SEC approves Hashdex and Franklin Templeton's combined Bitcoin and Ethereum crypto index ETFs

SEC approves Hashdex and Franklin Templeton's combined Bitcoin and Ethereum crypto index ETFs

The SEC approved Hashdex's proposal for a crypto index ETF. The ETF currently features Bitcoin and Ethereum, with possible additions in the future. The agency also approved Franklin Templeton's amendment to its Cboe BZX for a crypto index ETF.

More Cryptocurrencies News
Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy

Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy

Bitcoin price has surged more than 140% in 2024, reaching the $100K milestone in early December. The rally was driven by the launch of Bitcoin Spot ETFs in January and the reduced supply following the fourth halving event in April.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP