What does Biden administration’s latest move on cryptocurrency mean for investors?

July 22, 2021 01:41 PM AEST | By Furquan Moharkan
 What does Biden administration’s latest move on cryptocurrency mean for investors?
Image source: Bitcoin, Ethereum and Ripple coins - largest cryptocurrencies by market capitalisation. © Josefkubes

There have long been concerns surrounding the underground economy supported by cryptocurrencies. Few years back, the global drug trafficking was also alleged to be supported by digital currencies. With more and more formalisation of cryptocurrencies, the drug trade aspect of it, has more or less diminished.

However, the concerns surrounding the tax evasion and black money continue to persist. This is one of the probable reasons why policymakers, who otherwise bank a lot on the greater fool theory, have been averse to an asset class that follows the greater fool principle to a large extent. For the uninitiated, the greater fool theory suggests that if there is another person ready to buy an overvalued asset at a higher cost than you, it is a good investment for you. However, in the long run, this attitude leads to scary wealth bubbles.

But, as the market for cryptocurrencies grows, governments, rather than being indifferent, as trying to address the taxation issue in a more formalised manner. Among the major economies, the first step seems to have come from the US.

The US government, earlier this month, announced a gamut of proposed changes to cryptocurrency reporting as part of Joe Biden’s proposed American Families Plan.

                     

Crypto Buzz || Is China Involved In The 2021 Cryptocurrency Crash?

 

As per the plan, a new legislation will come up for businesses and crypto exchanges, which would require them to report any digital currency transactions with a fair market value of US$10,000 or more, to the US Internal Revenue Service (IRS).

The move will bring cryptocurrencies at par with cash as the threshold for reporting the cash deposit transactions currently is at the same level. As on date, in case you deposit anything in excess of US$10,000 into your checking account, your bank is supposed to make its entry with the federal government.

According to a statement by the Treasury Department, cryptocurrency “poses a significant detection problem by facilitating illegal activity broadly including tax evasion.”

With regulatory vigil, the move may lead to reduction in illicit payments, reduced tax evasion and decreased risk of cyberattacks. That said, no one would say that this would be the last move on this front. It is probably the beginning. The beginning of mainstreaming the cryptocurrency at a policy level.


Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (Kalkine Media, we or us), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.


AU_advertise

Advertise your brand on Kalkine Media

Sponsored Articles


Investing Ideas

Previous Next
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.