The SEC has treated cryptocurrencies as a commodity for several years, but this was apparently widely ignored by investors. To fix this the U.S. Congress added a provision to the infrastructure bill that would require cryptocurrency brokers to report crypto activity to the IRS with the goal of raising tax revenue to defray costs of the infrastructure bill itself, estimated to raise $28 billion over 10 years.
Investment gurus argue that if imposed this proposal would slow the growth of crypto value, currently approaching a $2 trillion market value.
“The cryptocurrency sector is back in sight of a $2 trillion market value, a level last seen in May, but further gains face an obstacle from potential new U.S. tax reporting requirements.
The value of more than 8,800 tokens tracked by CoinGecko has risen 55% to $1.95 trillion from a July low, helped by rallies in Bitcoin and Ether. The climb in Bitcoin has stalled due to the oversight of virtual currencies in the infrastructure bill passed by the Senate, according to crypto exchange Luno.
“Bitcoin’s rally was capped due to the bill” and it’s now hovering between $45,000 and $47,000, said Vijay Ayyar, Luno’s Asia-Pacific head in Singapore.
The crypto industry failed to adjust the tax reporting rules — which are projected to raise about $28 billion in revenue — despite a big push by lobbyists, and procedural issues could imperil efforts to change the provision when the House of Representatives takes up the bill. Bulls remain undaunted, with predictions of $100,000 for Bitcoin flying around after its latest comeback.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group