Several prominent crypto commentators have recently voiced their criticism of the new crypto tax reporting rules proposed by United States President Joe Biden. On August 25, the Internal Revenue Service (IRS) announced new rules for brokers to follow when selling and trading digital assets in order to prevent tax evasion. These rules would require brokers to use a new form for tax filing purposes. The U.S. Department of the Treasury stated that these rules would bring digital asset reporting in line with reporting for other assets. However, many members of the crypto community believe that these stringent rules will have a negative impact on the crypto industry in the United States.
Ryan Selkis, the CEO of Messari, expressed his disapproval of the new rules, claiming that if Biden is reelected, the crypto industry will not thrive in the country. He suggested that those in the industry should consider moving abroad or supporting gubernatorial candidate Gavin Newsom, who may be more favorable towards crypto. Selkis emphasized that crypto has always been a political issue and urged his followers to have a nice weekend.
Chris Perkins, the president of crypto venture firm CoinFund, also believes that the United States is falling behind other countries in terms of crypto innovation. He argues that instead of implementing harsh crackdowns, the U.S. should focus on creating simple and detailed rules that allow for safe innovation in the crypto industry. Perkins emphasized the need for proactive and nuanced policies that encourage responsible innovation across various crypto sectors. He believes that clarity will eventually come, but the time to engage is now.
There are also skeptics who doubt that either the Democrats or Republicans will adequately support crypto interests in the United States. Some users expressed their lack of confidence in either party, while others raised concerns about privacy issues stemming from the new rules. They believe that the U.S. government’s dedication to income tax makes it difficult for them to accept private transactions on public ledgers without surveillance for tax and sanction purposes.
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Kristin Smith, the CEO of the Blockchain Association, previously expressed reservations about merging digital asset reporting with traditional assets. She noted that the crypto ecosystem is fundamentally different from traditional assets and that the rules should be tailored accordingly. Smith argued that the rules should not negatively impact ecosystem participants who may not have a clear path to compliance.
This comes after Biden’s suggestion to impose taxes on crypto mining to reduce mining operations. A budget proposal released in March suggested a 30 percent excise tax on the costs of electricity used in digital asset mining. The U.S. crypto industry has repeatedly expressed concerns about regulatory decisions affecting innovation within the country.
Michael Sonnenshein, the CEO of Grayscale Investments, warned that constant enforcement actions by the Securities and Exchange Commission could drive crypto firms out of the United States. He argued that if every crypto issue requires legal intervention, it stifles the innovation that is taking place in the country. Similarly, Brad Garlinghouse, the CEO of Ripple, recently stated that the crypto industry is moving away from the United States due to its slower regulatory process compared to other countries like Australia, the United Kingdom, and Singapore.
Overall, the crypto community’s response to Biden’s new tax reporting rules has been largely negative, with concerns about stifling innovation and the possibility of the industry moving away from the United States. Critics argue that the rules should be more tailored to the unique characteristics of the crypto ecosystem, and that a more proactive and nuanced approach is needed to foster responsible innovation in the industry.
