Several prominent figures in the cryptocurrency industry have expressed their criticism of the new crypto tax reporting rules proposed by President Joe Biden. On August 25, the Internal Revenue Services (IRS) suggested that brokers follow new regulations for selling and trading digital assets in an effort to prevent tax evasion. The proposed rules require brokers to use a new form to simplify tax filing and deter cheating on taxes. The Treasury stated that these rules would make digital asset reporting similar to reporting on other types of assets.
However, many individuals within the crypto community believe that these stringent rules will only further alienate the crypto industry from the United States. Ryan Selkis, CEO of Messari, was among those who responded unfavorably to the news, stating that there is no future for crypto in the US if Biden is reelected. Selkis suggested that individuals in the crypto industry consider moving abroad or voting for the GOP in hopes of a more favorable stance on this issue. He emphasized that crypto has always been a political matter.
Similarly, Chris Perkins, president of crypto venture firm CoinFund, believes that the US has fallen behind other countries in terms of crypto innovation, and these rules will only hinder the flow of innovation into the country. Perkins argues that instead of implementing harsh crackdowns, the US needs simple and detailed rules that allow for safe innovation within the crypto industry.
There are also skeptics who doubt that either the Democrats or the Republicans would adequately support crypto interests in the US. One user expressed their lack of confidence in either party, stating that it feels worse now than during the previous presidency. Another user raised concerns about privacy, noting that the US’s commitment to income tax makes it difficult for them to accept private transactions on public ledgers without surveillance for tax and sanctions purposes.
Previously, Kristin Smith, CEO of the Blockchain Association, expressed reservations about merging digital asset reporting with traditional assets. Smith stressed that the crypto ecosystem is different from traditional assets and that the rules should be tailored accordingly to avoid capturing ecosystem participants who do not have a pathway to compliance.
Biden’s suggestion to impose taxes on crypto mining as a means to decrease mining operations has also raised concerns within the industry. A budget proposal in March called for an excise tax equal to 30% of the costs of electricity used in digital asset mining.
The crypto industry in the US has repeatedly voiced concerns about regulatory decisions impacting innovation within the country. Grayscale Investments CEO Michael Sonnenshein warned in August that the Securities and Exchange Commission’s constant enforcement actions will drive crypto firms out of the US and hinder innovation.
Overall, these new crypto tax reporting rules have sparked criticism among prominent figures in the crypto community who fear that they will hinder the growth and innovation of the industry within the United States. As the industry continues to evolve, it remains to be seen how these regulations will impact the future of crypto in the country.