Now it’s time to tax cryptocurrencies. The US government is planning to go for some serious tax on cryptocurrencies which is going to impact on the raise of revenue for the government.  A new bipartisan $1.2 trillion infrastructure bill in Congress intends to raise an estimated $28 billion from cryptocurrency tax enforcement measures as one of its financing mechanisms.

The tax enforcement action will see the IRS requiring digital assets affiliated entities to report any transactions they make involving digital assets. Specifically, the draft which has been viewed by several new outlets defines digital assets as “any digital representation of value … recorded on a cryptographically secure distributed ledger.” 

Until 2019, the IRS did not officially require reporting of cryptocurrency holdings, creating an easy loophole for evading taxes with cryptocurrencies. Since then, reporting crypto holdings have been required by the taxation body.

The proposed bill which has been given a thumbs up by President Biden apart from the cryptocurrencies taxation move proposes to raise funds to finance it by repurposing relief funds, auctions, Superfund fees, fuel sales, and other sources of revenue. 

A recently published fiscal policy paper for the year 2022 proposed a requirement for cryptocurrency brokers both in the US and internationally, such as exchanges and hosted-wallet providers, to provide information to the IRS on foreign individuals indirectly holding accounts with them in a gesture that will also be reciprocated by the US.

Cryptocurrency taxation has long been in the economic plans of the current administration. While in the past, cryptocurrency holdings were not paid much attention by the IRS, recent proposals and calls may change that. Recall that crypto taxation moves made by the US recently caused a flurry in the market that saw investors selling off their cryptocurrencies.