The Biden administration has proposed international cooperation to clamp down on crypto tax evasion by sharing data globally.
The Biden administration is making an effort to clamp down on crypto tax evasion by asking for the collection of data on foreign cryptocurrency investors active in the U.S. The United States Treasury Department released a series of revenue proposals late last month when the suggestion was made. The effort is a bid to increase international cooperation on tax evasion related to crypto.
The guideline would require cryptocurrency brokers like exchanges and hosted wallet providers to provide information to the Internal Revenue Service (IRS). This information would be related to foreign individuals that indirectly hold accounts with said entities.
Many foreign individuals currently use platforms based in the U.S. to make their trades. Given that crypto tax laws are still very much in the early stages, there are likely many earnings going unreported. The U.S. would hand information on these purchases to foreign governments.
In return, it would receive information on U.S. citizens who could be dealing in cryptocurrencies abroad. Many Americans also use foreign exchanges and wallet providers to handle their crypto investments.
The IRS has previously made efforts to ensure tax compliance within the United States. But the new suggestion marks a significant step forward in terms of ensuring compliance. It will be interesting to see how other governments take to this idea, as they too are concerned about taxation.
Biden administration keen on crypto regulation
The Biden administration is making a concerted effort to plug any loopholes in the crypto market. Many new statements and potential regulatory changes have been suggested in the past few months. These include those related to taxation, KYC/AML, and investor protection.
Several new appointees in key positions have also made their opinions on the crypto market known. While they are not particularly welcoming of cryptocurrencies, they do acknowledge that the technology has benefits. The key focus at the moment appears to be investor protection.
Treasury Secretary Janet Yellen, SEC Chairman Gary Gensler, and OCC Acting Comptroller Michael J. Hsu have all made remarks to that end. The sudden uptick in cryptocurrency discussion, and the remarks made by officials, are a clear sign that 2021 will likely be a year of regulatory focus on cryptocurrencies.
The world at large is also very interested in seeing how the U.S. tackles regulation, which could set an example for other countries. South Korea, China, and the U.K. are all also doubling down on regulation, with similar reasons to that of the United States.