The Strategist

USA to introduce cryptocurrency tax

09/02/2021 - 07:20

The U.S. government announced that it will soon introduce tax rules for cryptocurrency transactions. The announcement caused discontent among traders, but in the long term, the new rules could strengthen the digital money trading system, Bloomberg writes.
U.S. residents must pay income tax on any profits, but many crypto investors ignore this obligation. For several years now, the Internal Revenue Service (IRS) has been notifying Americans of the need to declare profits from cryptocurrency transactions. Now, however, the agency has made it clear that monitoring this market is its top priority and taxes will become mandatory. The IRS said it will require cryptocurrency brokers to disclose details of transactions over $10,000.

At the same time, it can be difficult for traders who want to comply with the law to keep track of their debts. Stock market brokers are already required to send tax forms to clients, but crypto exchanges remain "off the radar." Even if firms want to help investors pay taxes, they don't understand how to comply with current law. Some traders use special services to determine their debts. 

Cryptocurrency exchanges and other market participants are unhappy that the U.S. Senate is introducing new rules without first consulting them. Those involved in the industry cannot predict what the consequences will be. The rules could both attract more investors and reduce the appeal of cryptocurrency by destroying the halo of permissiveness.