Crypto Global

The US Infrastructure Program: Cryptocurrency Regulations Are Coming!

Aug 10, 2021

There have been a number of articles in the news lately about new crypto regulations, new reporting requirements, and even new taxes.

It's all about this new infrastructure bill in America, and we've seen US politicians push for a ton of money in new taxes to prop up the infrastructure in America. There are some provisions in this infrastructure bill that will increase taxes for crypto investors. The regulations aim to raise $28 billion in infrastructure funding through expanded taxation on digital assets.

According to the Bloomberg Wealth article dated July 31, 2021, crypto investors must be prepared for more taxes and that “crypto brokers” can be asked to report transactions to the IRS (Internal Revenue Service). The collective term "crypto broker" has annoyed the crypto community as the DeFi market could be subject to third party tax reporting, even though this part of the crypto market does not have any personal data about its counterparties. Reporting every user to the IRS would be an impossible task. It seems that the US will not be a friendly place for crypto and it will be catastrophic for the US crypto ecosystem if someone understands the importance of promoting research and innovation in a country.

The bottom line is that governments like to tax assets. This bill now gives the government the ability to monitor and collect tax revenues. Since this industry is new, the definition of a “broker”, which is as broad as critics pointed out, could apply to miners, hardware and software developers, node operators and so on. The bill extends the definition of the term “broker” to anyone who enables the transfer of digital assets. But governments cannot tax miners or hardware developers etc. because they do not know the transactions. Miners are paid by the blockchain to process transactions. Miners don't send money to crypto investors. So there is unfortunately still a big misunderstanding of how this crypto industry works.

Ultimately, the government will always look for ways to generate income to pay for the programs they want. The strength of Bitcoin and other crypto assets has shown that it is becoming all the more important to introduce regulations and tax laws around crypto.