During the month of August, the House of Representatives was alive with heated debates on digital assets. Indeed, the government wants to raise $28 billion in tax revenue, by increasing reporting requirements for crypto players. And as if that wasn’t enough, the White House is back at it with a new set of reporting requirements that could heavily affect holders of bitcoin and other cryptocurrencies.
After the infrastructure plan, the budget bill will also have provisions for digital assets.
One of Joe Biden ‘s key presidential campaign points was the creation of a massive infrastructure plan. The $1 trillion bill aims to renovate the nation’s bridges, roads and railroads while creating green infrastructure. However, a way must be found to finance this ambitious plan.
U.S. lawmakers have added a series of tax provisions to the bill. Among them is a proposal to expand the definition of broker to include all actors dealing with digital assets. This extension would have the effect ofimposing disproportionate obligations on certain players such as miners or portfolio operators, who are not really brokers.
Stakeholders in the crypto ecosystem have tried everything to restrict the scope of the amendment, but without success. The law and the amendment were passed during August, with a special provision that prevents further amendments to the text. Nevertheless, pro-crypto parliamentarians are not giving up and want to try again to reduce the scope of the new obligation before the vote scheduled for 15 September.
This week, the lower house of parliament voted on the budget reconciliation bill. Budget reconciliation is a special procedure to speed up the passage of the bill through the Senate. One of the reasons for this is to prevent the opposition from slowing down the democratic process.
In this legislation, the U.S. Treasury Department wants to include new requirements related to the control of digital asset transactions.
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Towards an international system for monitoring cryptocurrency transactions?
The Biden administration wants to include a disclosure requirement against crypto companies in the budget bill. These requirements would require cryptocurrency companies to disclose information about US citizens who have opened accounts with them.
The measure is aimed at closing the U.S. fiscal deficit and was already included in the Treasury proposals released earlier this year. Indeed, the administration estimates that tax evasion creates a $1 trillion deficit. And, this evasion would be enabled by shell companies and providers domiciled abroad, like crypto exchanges.
The proposal would result in automatic information sharing on U.S. taxpayers trading digital currencies in other countries. Subsequently, the administration would use this data to enforce tax regulations.
However, in order to have access to this information, the US must be able to provide the same data. This new measure would therefore be similar to what are called tax treaties. These are bilateral agreements on the exchange of banking and tax information. These are the agreements that require French banks to ask you if you are a US citizen when you open a bank account.
The future of financial regulation seems to be going global. Indeed, this proposal echoes the creation of a universal corporate tax. In addition, the Financial Action Task Force (FATF) also advocates a mutualisation of control procedures in order to apply banking legislation to the decentralised finance ecosystem.
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