Bitcoin taxation: What’s it all about?
The sensationalism that has dominated the mainstream news over the weekend has focused on using language synonymous with draconianism, incluing ‘crackdown’ and ‘enforcement’.
This perhaps somehow misses a very important point, and in particular a point that has been realized very quickly by Bitcoin traders; that a rollout of a taxation system for cryptocurrency is another move toward the vital evolution of a global framework for enabling the future of decentralized financial services to operate within a well thought out set of regulatory and taxation guidelines.
Over the weekend ending August 8, 2021, a group of US Senators had worked closely over the amendment language which is to be included in the cryptocurrency tax reporting provision of the Infrastructure Investment and Jobs Act, which is one of many offsets designed to pay for the costs of the legal framework.
Back in May this year, it was unveiled that the Internal Revnue Service (IRS) would be provided with a set of reports by banks and financial institutions across the United States as part of a proposed new means of detecting unreported income among US taxpayers, and cryptocurrencies, cryptocurrency asset exchanges and payment services would be subject to that new reporting rule.
This was seen at the time as a move toward government interference in the overtly free nature of decentralized currency trading and usage, however it is really quite the opposite.
As the White House has updated its fact sheet on the new proposed rulings, it has become apparent that part of this will focus on the “strengthening of enforcement when it comes to crypto currencies.”
This is a clear allusion toward not only making income in cryptocurrency and activities relating to it declarable, but also toward the inevitable full regulation of cryptocurrency, something which Coinmetro is very much an advocate of and has been since the company’s inception.
From the outset, Coinmetro has been a fully licensed and regulated cryptocurrency exchange, which also holds an Electronic Money Institution (EMI) license which is effectively an e-wallet license making a Coinmetro not only a regulated exchange, but also a fully regulated payment processor.
Operating under a fully regulated banner gives Coinmetro the leading edge in being a mainstay in developing the entire decentralized financial services industry as it develops further.
Under Joe Biden’s proposed cryptocurrency taxation plans, a new law would require businesses to file a current transaction report when they receive payment in cryptocurrency worth more than $10,000, just as most businesses are required to report cash payments of more than $10,000.
This is a sign that the US regulators have plans to treat cryptocurrency in the same way as fiat currency in terms of how it is reported for tax purposes, and this could well lead on to other regulations being required to be adhered to by cryptocurrency users, institutions and DeFi participants in the United States.
Therefore, it is worth considering that a cryptocurrency exchange that has full facilities including a leading fiat currency on-ramp, multi-asset cryptocurrency capability, trading functionality and payments services which is fully regulated has the right approach and components to be able to evolve easily as the exciting future of decentralized financial services becomes increasingly mainstream.
One of the most recent amendments to the proposals has come from Democratic Senator Mark Warner of Virginia, along with fellow Democratic Senator Krysten Sinema of Arizona which, according to reports in the Washington Post, is being pushed by the Treasury Department and the current Administration, was updated to exclude proof-of-stake validators as well as proof-of-work cryptocurrency miners from the crypto tax reporting provision.
Senator Warner, according to a Forbes report over the weekend noted to reporters that this was likely the final list of exemptions, which leaves software developers and decentralized platforms exposed to the new statute, should it pass.
Currently, protection for miners and software and hardware manufacturers has been left out, however the original amendment to the bill has been approved by Republican Senators Pat Toomey of Pennsylvania and Cynthia Lummis of Wyoming, both of whom are viewed as part of Washington DC’s perceived ‘cryptocurrency lobby’.
With the prices of cryptocurrencies having risen tremendously over the past day, the shrewd investors are making their views clear in that a properly designed set of taxation and regulatory guidelines, Coinmetro is well positioned to be part of the pioneering lead which will form the decentralized financial services industry of now and the future.