- Bitcoin received another kick in the nuts yesterday as the U.S. Treasury released a report suggesting that a clampdown on tax evasion would heavily target the crypto space
- News that transactions over $10,000 would be logged with the IRS first emerged last year
- Bitcoin is now in danger of losing any momentum built on the back of the recent recovery from $30,000
The Bitcoin FUD attack continued yesterday after the U.S. Treasury arrived like a drunkard wading into a fight hours after the last punch has been thrown. In a snappily-named paper called ‘The American Families Plan Tax Compliance Agenda’ the Treasury outlined how they plan to “close the “tax gap”” by ramping up the abilities of the Inland Revenue Service (IRS) to track and investigate tax evasion, in particular cryptocurrency transactions, which the authorities hope will help haul in some of the $600 billion that in 2019 was estimated to have been lost in unpaid tax. The news hit Bitcoin just as it was starting to recover, sending it back under $40,000 and prompting fears of further drops.
IRS To Be Modernized
The paper noted that U.S. citizens are using Bitcoin and other cryptocurrencies as a way to avoid their tax obligations and that the IRS is unable to properly track it because it “operates outdated systems and lacks the ability to fully take advantage of the benefits of more modern technology due to its resource constraints.” This backward way of approaching the issue of taxing crypto assets has resulted in cryptocurrency users being unfairly treated with judgements made on incorrect or incomplete information.
The proposal of a new taxation system will offer “additional resources for the IRS to address the growth of cryptoassets”, with the headline-making news that any transactions over $10,000 will require reporting to the IRS. Various news outlets picked up on this particular nugget and flashed it all over social media, which was the chief reason behind Bitcoin’s inability to reclaim $42,000.
However, this suggestion itself is nothing new – the idea was planted five months ago when FinCen proposed new rules to regulate the cryptocurrency sector and would put cryptocurrencies in line with existing financial regulations.
Bitcoin Faces Uphill Battle to Continue Bull Market
Headlines screaming about a crypto crackdown were duly flashed across social media, causing people to panic sell (and create taxable events in doing so) before it was revealed that any measures wouldn’t come into place until 2023.
After a week where FUD has helped Bitcoin drop to $30,000 ,it can’t be beyond the realms of possibility to expect something else to be rehashed from 2017 that acts as the final nail in the coffin for this bull run.