Crypto community reacts to Biden’s proposed crypto tax reporting rules

Several prominent crypto commentators have criticized the new crypto tax reporting rules recently put forth by United States President Joe Biden. 

On Aug. 25, to catch crypto users avoiding taxes, the Internal Revenue Service (IRS) proposed brokers follow new rules for selling and trading digital assets. Brokers would use a new form to make tax filing easier and prevent cheating on taxes.

The U.S. Department of the Treasury indicated that the proposed rules would make digital asset reporting similar to reporting on other assets.

However, many in the crypto community believe the stringent rules will push the crypto industry further away from the United States.

Messari CEO Ryan Selkis was among those who responded unfavorably to the news, saying that if Biden secures reelection, the crypto industry will not flourish in the country. 

There’s no future for crypto in the US if Biden is reelected. I’m sorry.

Move abroad, draft Newsom and hope for the best, or vote GOP where at least we know the top three candidates are less terrible on this issue.

Crypto has always been political. ‍

Have a nice weekend.

— Ryan Selkis (@twobitidiot) August 25, 2023

Likewise, Chris Perkins, president of crypto venture firm CoinFund, holds the view that other countries have surged ahead of the U.S., and these rules will inevitably result in reduced innovation flowing into the country.

Rather than resorting to harsh crackdowns, he believes simple and detailed rules allowing safe innovation across the crypto industry are needed.

To clarify, I agree that other jurisdictions have seized the initiative and the U.S. has sadly fallen behind. We need proactive, nuanced policies that encourage and unlock responsible innovation across crypto verticals. Clarity is coming, one way or another. The time to engage…

— Christopher Perkins NYC (@perkinscr97) August 26, 2023

Meanwhile, others remain skeptical that neither the Democrats nor the Republicans would adequately champion crypto interests in the United States.

“I’m not confident that either party would be good for crypto. Though it definitely feels worse now than last presidency,” one user stated, as another pointed out that the new rules raise privacy concerns:

“US devotion to income tax means they can NEVER accept private transactions on public ledgers without tax and sanction surveillance.”

On Aug. 25, Cointelegraph reported that Kristin Smith, CEO of the Blockchain Association, held reservations about merging digital asset reporting with traditional assets.

“It’s important to remember that the crypto ecosystem is very different from that of traditional assets, so the rules must be tailored accordingly and not capture ecosystem participants that don’t have a pathway to compliance,” Smith stated.

This follows Biden’s suggestion to impose taxes on crypto mining to decrease mining operations. 

A budget proposal dated March 9 proposed that there would be an “excise tax equal to 30 percent of the costs of electricity used in digital asset mining.”

Related: US crypto’s future could fall on these 4 digital asset bills

The crypto industry in the U.S. has repeatedly voiced concerns about regulatory choices affecting innovation within the nation.  

On Aug. 13, Grayscale Investments CEO Michael Sonnenshein warned that the Securities and Exchange Commission constantly resorting to enforcement action will drive crypto firms out of the country.

“If every crypto issue needs to go to a court of law, then as a country, we are squashing the innovation taking place here,” Sonnenshein stated.

In the same vein, Brad Garlinghouse, CEO of Ripple, recently indicated that the crypto industry is shifting away from the U.S. due to its slower crypto regulation process compared with other countries like Australia, the United Kingdom and Singapore.

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