White House Proposes Update to Digital Asset Rules, Expands Crypto Taxation

The U.S. Biden administration has released its 2023 budget report, with a budget of $5.8 trillion for the year and a projected deficit of $1.15 trillion, which also includes some content about the U.S. government’s long-term plans for cryptocurrencies. The White House’s proposed update to digital asset rules, largely by expanding tax filing requirements, is expected to bring in more than $10 billion in new revenue over the next 10 years, according to the report.

The budget pointed to an additional $52 billion for the Justice Department to hire more agents and access analytics services as part of “the government’s anti-ransomware strategy to emphasize disruptive activity and combat the abuse of cryptocurrencies.”

In addition to the White House budget, the Treasury Department released a strategic plan for the next four years. The plan highlights the role of the Financial Stability Oversight Council in addressing “new and growing threats to financial stability, with a focus on climate change and the risks of digital assets,” in line with Treasury’s expansion of the FSOC in Consistent with work on the role of encryption in the field.

Earlier in March, Biden issued an executive order on digital assets. Despite some pre-existing concerns within the crypto industry, the order primarily commissioned research from a range of federal agencies, rather than calling for a broad crackdown.

The crypto market has ushered in a fresh wave of gains following Biden’s executive order on digital assets. With the extensive development of the crypto industry, the U.S. tax plan for the industry has gradually been put on the agenda.

In fact, in addition to the aforementioned expanded crypto tax filing requirements, the U.S. Treasury Department is also working to obtain more information about offshore crypto holdings from the IRS. In a “green paper” released by the U.S. Treasury Department, the Treasury Department made a proposal to extend a longstanding rule to digital assets that would require Americans to report foreign financial accounts worth more than $50,000.

“Tax compliance and enforcement of digital assets is a rapidly growing issue. Because the industry is fully digital, taxpayers can transact with offshore digital asset exchanges and wallet providers without leaving the U.S.,” the proposal explained. . In addition, the Treasury Department’s proposal includes efforts to apply the Foreign Account Tax Compliance Act to U.S. exchanges that hold accounts for foreign users.

It is worth mentioning that these reforms, if approved, would theoretically take effect in early 2023. In recent years, however, it has become more common for the budget to fail to pass Congress.

At the same time, the regulation of crypto taxation also extends to mining companies. On March 29, U.S. Senate Finance Committee Chairman Ron Wyden is investigating whether “opportunity zones” are driving investment and job creation in low-income communities as expected, and crypto mining companies are the latest targets of his investigation. So far, companies that have received letters from Ron Wyden related to the investigation include Redivider Blockchain Opportunity Zone Fund LLC, Argo Blockchain and HCVT LLP.

The “opportunity zone” scheme is understood to be designed to provide benefits to investors developing and investing in less economically developed areas. And Ron Wyden said companies involved in cryptocurrency mining may be seeking to avoid taxes without actually benefiting struggling communities through opportunity zone programs.

As of 2019, more than 6,000 funds have invested about $29 billion in Opportunity Zones, the data shows. Wyden has previously proposed legislation to tighten rules in opportunity zones and demand more reporting to improve transparency. 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/white-house-proposes-update-to-digital-asset-rules-expands-crypto-taxation/
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