Treasury Pushes Global Crypto Reporting Rules in $3.5T Budget Bill
- The U.S. Treasury is pushing for new crypto reporting, requiring U.S. exchanges to share data on non-U.S. customers.
- The Biden administration wants to exchange this data for information on U.S. residents’ crypto accounts in other countries.
- The new proposal comes only weeks after the Senate approved new tax reporting requirements for crypto brokers in the $1 trillion Infrastructure Bill.
According to a report citing an anonymous administration official published Monday, the U.S. Treasury is pushing for new tax reporting requirements for crypto exchanges in the upcoming $3.5 trillion budget reconciliation bill.
Treasury Wants Data on Offshore Crypto Accounts
The U.S. Treasury reportedly wants U.S.-based crypto exchanges to report data on non-U.S. customers.
The purpose of the provisions would be to gather information on foreign crypto account holders so that the U.S. could automatically share this data with other countries in exchange for information on U.S taxpayers trading cryptocurrencies in other countries.
The Biden administration hopes to leverage the new tax reporting requirements to enforce tax compliance on U.S. crypto investors. The administration suspects that U.S. taxpayers are setting up offshore corporate entities in order to trade cryptocurrencies while avoiding paying taxes. To stop this, the U.S. needs information from other countries, which it can only get if it comes up with its own data to trade.
Furthermore, the treasury reportedly wants to expand the information reporting requirements to the “beneficial owners” of the legal entities set up by foreign account holders to trade cryptocurrencies. A beneficial owner is a legal term for natural persons that enjoy certain ownership benefits even though the legal title of the property belongs to another person. In the U.S., this includes individuals who own at least a 25% equity stake in the legal entity or those with “significant responsibility to control, manage, or direct” the said entity.
According to Treasury’s Green Book, third-party information reporting is critical in combating tax avoidance:
“In order to ensure that the United States is able to benefit from a global automatic exchange of information framework with respect to offshore crypto assets and receive information about U.S. beneficial owners it is essential that United States reciprocally provide information on foreign beneficial owners of certain entities transacting in crypto assets with U.S. brokers.”
Commenting on the latest news, Jerry Brito, CEO of crypto think tank Coin Center, tweeted, “We don’t object to crypto tax reporting requirements (indeed we’ve asked for reporting guidance for years), we object to last-minute additions to ‘must-pass’ bills outside regular order and with little or no public input.”
Earlier this month, Coin Center and the Blockchain Association, among others, lobbied the Senate against the last-minute provisions Secretary Yellen reportedly pushed to include in the $1 trillion Infrastructure Bill. The industry-led effort failed to amend the bill, which includes provisions that make crypto brokers—a too broadly defined term according to industry experts—responsible for sharing tax information with the IRS.
Disclosure: At the time of writing, the author of this feature owned ETH and several other cryptocurrencies.
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