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- Cryptocurrency data needs to be regulated for which the IRS needs authority and funding from the Congress
- IRS had issued a circular which stated that cryptocurrency transactions above $10000 need to be reported to the authority
- Regulations over digital currencies take shape as developed countries take fight against money laundering activities
Cryptocurrency scams rose 1000% since October 2020 as $80 million worth of investments were lost to it. The FTC received 7000 scam reports where users claimed that they lost access to their digital wallets or they were lured into fake schemes.
Hence, the IRS has requested the Congress to empower them with further competency to regulate cryptocurrency data. The Internal Revenue Service has ordered that transactions above $10000 need to be reported by users. Moreover, it will ensure that the wealthy do not evade paying tax on capital gains.
The empowerment will build an even laying turf for all investors. New entrants will not be scared about losing their money as they are protected from fraud and believe in transparency of the distributed ledger technology.
Crackdown against tax evaders
The commissioner of IRS, Charles P Rettig, testified to the Senate Finance Committee about the funding requirements to regulate the cryptocurrency market. It will be beneficial to match taxes due with taxes paid by high net worth clients. The Service has also requested that the transaction reporting limit be reduced to $600 to make the process less cumbersome.
The volatile nature of cryptocurrencies has led to extreme valuations which has helped investors with ample profits. The IRS claims that such profits are not being reported as the tax gap has reached $1 trillion. The market capitalization of the cryptocurrency asset class has reduced to $1.51 trillion.
Furthermore, the IRS requires $41 million for expansionary measures and tackle cybercrime and $32 million for enforcement of cryptocurrency laws. The Biden administration has found that tax evasion cost the government millions in revenue and strict crypto laws and taxation policies will benefit the government.
Regulatory power to gain smooth access
The regulatory powers requested by the IRS will allow the organization to carry out its work efficiently and fine the tax evaders. Crypto scams will reduce as the regulatory framework will create awareness among the investors and ensure they invest in a legitimate manner.
The revenue proposals will benefit oversight conducted by IRS Taxpayer Advocate, the Government Accountability office and the Treasury Inspector General for Tax Administration. Individuals prone to tax evasion will stop the fraudulent activity and clear their dues on time.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
