Strict Enforcement of Crypto Taxation: US Treasury Pushes for Global Crypto Data Sharing Rules

According to foreign media Roll Call, citing an anonymous government official, the Biden administration urged the Democrats to include more tax compliance rules for cryptocurrency transactions in the upcoming $3.5 trillion budget plan: the US government hopes to increase cryptocurrency companies (trading platforms) reporting of data on non-US users in exchange for data on US taxpayers trading digital currencies in other countries to ensure that crypto asset holders pay taxes as soon as possible.

A surge in the number of shell companies set up overseas by U.S. taxpayers to avoid taxes, including on cryptocurrency gains, requires stricter reporting measures, according to the Treasury Department.

The Treasury Department's green paper states: "The global nature of the crypto market provides U.S. taxpayers with opportunities to use offshore crypto exchanges and wallet providers to conceal assets and taxable income. U.S. taxpayers also attempt to circumvent U.S. tax returns by creating entities through which they can act. To combat the possibility that crypto assets are used for tax evasion, third-party information reporting is essential to help identify taxpayers and support voluntary taxation."

To get that information, however, the U.S. needs to be able to provide the same data on its own citizens with U.S. accounts to other countries as part of what are known as tax information exchange agreements.

The Treasury proposal would impose new rules starting in 2023 and apply to digital “wallet” providers for cryptocurrency exchanges and account holders. Such “custodial” wallet providers include trading and investment platforms such as Coinbase and Gemini.

It is reported that on August 24, local time, the U.S. House of Representatives voted to pass a $1 trillion bipartisan infrastructure bill (the bill plans to impose taxes on cryptocurrencies - expanding the definition of "brokers" in the tax law to include "any person who is responsible for and regularly provides any digital asset transfer service" in the "broker", raising about $28 billion), and approved a $3.5 trillion infrastructure budget framework with 220 votes in favor and 212 votes against. The House of Representatives will finally vote on this infrastructure budget framework on September 27. (Golden Finance)