The US wants to tighten cryptocurrency regulations and is investigating its own digital currency


When the capitalization of popular cryptocurrencies reaches trillions of dollars, they instantly attract the attention of various government agencies and tax agencies aimed at regulating and taxing them. According to a report by Reuters, the U.S. Treasury Department this week proposed treating cryptocurrency transactions like cash and reporting all major transfers to the Internal Revenue Service (IRS). Meanwhile, the US Federal Reserve chief said cryptocurrencies pose risks to financial stability.

For years. Cryptocurrencies like Bitcoin, Ethereum, and Chia were on uncharted territory that was hidden from the eyes of regulators and tax authorities. People who mine cryptocurrencies and use them to buy certain products or services do not report their income or expenses. Since transactions are carried out in a decentralized system, it is almost impossible for authorities to control them. One such opportunity arises when people convert real money to crypto and vice versa, which happens when cryptocurrencies become investment vehicles for millions of people around the world. For obvious reasons, the tax authorities do not want to do without it.

The Biden government's proposal to strengthen tax compliance includes a requirement to report transfers of at least $ 10,000 to the IRS, which essentially means the U.S. government wants to treat crypto like regular cash, Fortune reports.

“As with cash transactions, companies receiving crypto assets with a market value of more than $ 10,000 would also be reported To minimize the incentives and opportunities to shift revenue from the new information reporting system, "said a statement by the Ministry of Finance on the proposals for tax enforcement.

Jerome Powell, the head of the US Federal Reserve, said that cryptocurrencies pose risks to financial stability because they are unregulated and therefore unprotected. They could also be used for tax evasion. Meanwhile, he admitted that the US Federal Reserve is examining the possibility of introducing its own central bank digital currency (CBDC).

"To encourage broad discussion, the Federal Reserve Board will issue a discussion paper this summer setting out our current thinking on digital payments, with a particular focus on the benefits and risks associated with CBDC in the US context," said Powell. "As part of this process, we will be soliciting public comments on issues related to payments, financial inclusion, privacy and information security."

Treating cryptocurrencies like cash and regulating transactions is not something that will make the early adopters of bitcoins very happy. But regulation may actually allow for wider adoption of cryptocurrencies as they will gain more trust from banks and cautious individuals. Meanwhile, regulated CBDCs are a way for governments to get rid of traditional cash and replace it with digital currencies.

https://dailyaffiliatemarketingnews.com/the-us-wants-to-tighten-cryptocurrency-regulations-and-is-investigating-its-own-digital-currency/

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