The U.S is taking measures to address the tax loopholes that the ballooning crypto market has created. One of them is to require businesses and crypto exchanges to report crypto transactions over $10k. While this is standard practice in conventional finance, cryptocurrencies have been operating outside of this regulatory procedure up until now.
According to a U.S treasury report, this move aims to bridge the tax gap. Other measures that the U.S is taking include requiring cryptocurrency exchanges to report their gross transactions.
To help ensure that these regulations are adhered to, the U.S president has given the IRS extra funding. The move by the president to give more money to the IRS is in tandem with the issues raised by the treasury.
The report noted that as the crypto market continues to expand, it has created a new avenue for tax evasion. This has complicated matters for the IRS since it also has to deal with traditional methods of tax evasion, such as the use of offshore accounts.
The treasury report also noted that while crypto may not be widely used today, the business generated from crypto-based transactions will keep growing.
Besides requiring reporting for transactions over $10k, banks will now be required to report crypto transactions to the IRS for tax purposes. The new proposals are set to come into effect in 2023.