In a bid to clamp down on tax evaders, the United States Treasury has moved to strengthen its restrictions on cryptocurrency transactions. Moving forwards, U.S. investors are required to report all transactions above $10,000 to the Internal Revenue Service (IRS) for documentation and taxation.
The news broke right after Bitcoin and the entire crypto lost over $350 billion in a massive crash.
A clampdown on cryptocurrencies?Unlike countries like China that have already outlawed Bitcoin, it appears that the U.S. is not ready to tow this path, at least not yet. The government is simply looking for ways to maximize revenue more effectively.
That being said, the IRS will be expanding its manpower and resources with an $80 billion package. And the end game will be that businesses and individuals that deal in the crypto space will be subject to stricter regulations.
It is easy to see where the agency’s motivation is coming from. Treasury officials are confident that the move will conservatively generate $700 billion within the next ten years. According to them, the weak enforcement of tax rules often benefits wealthier tax evaders since they have sophisticated tools within their reach to hide and launder money.
In general, US crypto investors should gear up for tighter restrictions. Recall that earlier this month, the United States District Court for the Northern District of California gave the IRS the go-ahead to obtain the identities of taxpayers who use Kraken via a John Doe summons.