The US Department of Treasury recently declared in a report on Thursday that “as with cash transactions, businesses that receive crypto assets with a fair market value of more than $10,000 would also be reported on.”
The treasury said it was a tax compliance protocol, further stating that cryptocurrency was increasingly becoming a way for individuals to evade tax payments.
In the report, the Treasury Department said that “cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion.”
However, the report acknowledged the growing importance of cryptocurrency in today’s world, saying “despite constituting a relatively small portion of business income today, cryptocurrency transactions are likely to rise in importance in the next decade, especially in the presence of a broad-based financial account reporting regime.”
After the announcement, the price of Bitcoin and other crypto assets dipped slightly. It should be recalled that the cryptocurrency market has bled profusely after experiencing a massive correction.
Bitcoin price dipped by 2.8% down to $40,428. Ripple gained 2% and Ethereum pumped by 4.4% according to coin base.
Also, the report outlined the Biden administration’s plan to empower the US tax agency with $80 billion till 2031 to boost adherence and income compilations. The American Families’ Plan is also focused on enhancing educational access, tax support, and any other kind of aid to American families.
The Treasury asserted that the proposal would shrink the tax gap by about 10% which they estimated to be roughly 3% of U.S. economic proceeds in the space of one decade, generating about $7 trillion.
The tax gap, which is the discrepancy between taxes gathered by the IRS and the legal tax owed, is estimated to be $584 billion in 2019, as stated in the report.
According to the report, the proposals would “increase fairness in the tax system and foster a tax system where Americans pay the taxes they owe. Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion.”
“Despite constituting a relatively small portion of business income today, cryptocurrency transactions are likely to rise in importance in the next decade, especially in the presence of a broad-based financial account reporting regime,” the report concluded.
On the other hand, the US Federal Reserve announced on Thursday it will release a research paper exploring the creation of its Central Bank Digital Currency (CBDC).
Fed Chairman Jerome Powell stated that “Technological advances also offer new possibilities to central banks — including the Fed,” he continued, “while various structures and technologies might be used, a CBDC could be designed for use by the general public.”