US: new cryptocurrency tax?
US: new cryptocurrency tax?

US: new cryptocurrency tax?

By Marco Cavicchioli - 30 Jul 2021

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The US Senate is looking to raise $28 billion through a cryptocurrency tax. 

Yesterday, a bipartisan bill to fund new infrastructure was debated in the Senate. 

The bill envisages spending $1 trillion to fund a plan to build new infrastructure to boost the economy after the pandemic crisis. 

This is still only a draft bill, currently being debated, but finding all the funds is not easy. That’s why new ways, and new taxes, are being suggested to try and raise it. 

In a podcast aired yesterday, it was revealed that a new cryptocurrency tax had been added to the bill at the last minute, aiming to raise $28 billion by imposing new reporting requirements on a wide swath of crypto intermediaries.

In fact, according to a draft of the bill, any broker who transfers digital assets will have to file a return based on a modified information reporting regime. The draft also includes decentralized exchanges and peer-to-peer marketplaces under the definition of “broker”. 

So this would not be a new rule introducing a new taxation regime, but a squeeze to make the current one apply to anyone trading with cryptocurrencies. 

There are, however, at least a couple of major doubts about this initiative. 

The first concerns the de facto impossibility of applying such a rule to decentralized exchanges, which are merely protocols installed on decentralized platforms that are not controlled by anyone. It is possible that the legislators are unaware of how decentralized exchanges really work, hence the hypothesis that DEXs will send reports seems as absurd as it is bizarre. 

The second concerns the $28 billion they hope to recover. As of today, the entire global crypto market is worth about $1.5 trillion, and to imagine that they can collect a sum equal to almost 2% of the total value of all cryptocurrencies in the world in this way seems so far-fetched as to appear, again, absurd. 

In other words, it’s as if this rule was written by someone who has no idea how crypto markets really work, so much so that yesterday, upon publication of this information, the crypto market almost didn’t react, probably because it appears more like the absurdities of imagination, rather than logical deductions due to realistic analysis of reality. 

Moreover, while the initiative to force centralized intermediaries to report any gains on crypto trading seems reasonable and legitimate, it is difficult to imagine that it alone could generate a multiplication of the proceeds from the taxation of capital gains.

Marco Cavicchioli

Born in 1975, Marco has been the first to talk about Bitcoin on YouTube in Italy. He founded and the Facebook group" Bitcoin Italia (open and without scam) ".

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