The US Internal Revenue Service (IRS) has introduced new proposed guidelines that could dramatically affect how major American cryptocurrency platforms operate, particularly key players such as Coinbase Global Inc (NASDAQ: COIN) and Kraken.
These guidelines suggest that digital currency exchanges, payment processors, and other related entities should be required to submit information returns and offer payee statements for any digital currency transactions conducted on behalf of users.
Furthermore, real estate professionals will be obligated to report the market value of any cryptocurrency used in property transactions, ensuring the worth of assets like bitcoin at the transaction’s time is documented.
For prominent crypto intermediaries in the US, these proposed measures could mean a substantial revamp of their reporting procedures. They would be tasked with meticulously logging and reporting every transaction, whether it’s buying, selling, or swapping digital assets, to the IRS.
Such measures might not only elevate operational expenses but could also deter users from these platforms.
A major allure of cryptocurrency is its pseudonymous nature, and with these guidelines, the IRS seems to be requesting these platforms to reveal user identities. This move might not sit well with a significant portion of users from platforms like Coinbase and Kraken.
From the IRS’s perspective, they consider missed crypto tax revenues as a considerable factor in the annual US tax discrepancy, which amounts to about half a trillion dollars (the difference between the expected and actual tax collections).
This situation raises a fundamental question: Will imposing more taxes on the affluent result in capital flight? In the crypto context, might it encourage users to flock to unregulated offshore markets, thus putting established platforms like Coinbase at a disadvantage?
A public discourse on this matter is set for November 7, with a potential follow-up session on November 8, given high interest.
Should the IRS proposals be accepted, the days of anonymity for US cryptocurrency enthusiasts might be numbered.
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