US President Joe Biden is not going after your bitcoin, despite claims online that he is using the IRS to shut down the cryptocurrency market.
Cryptocurrency, such as bitcoin, is a decentralized digital currency that has gained popularity in recent years as a potential alternative to paper money like the US dollar. Recently, in an effort to close the “fiscal gap,” the United States Department of the Treasury released new rules for reporting large cryptocurrency transactions to the IRS. The U.S. Family Plan’s Tax Compliance Program was released on May 20, a day after the Chinese government reissued restrictions on crypto transactions in the country.
Some online users claim the move is an effort by President Joe Biden’s administration to carry out its own crackdown on cryptocurrency.
Can the government stop cryptocurrency?
No, the US government cannot shut down the cryptocurrency markets, but it can regulate it.
WHAT WE FOUND
“The only way to ‘shut down’ cryptocurrency is to disconnect from the Internet,” Professor David L. Yermack said VERIFY.
âCrypto lives in cloud storage and is operated by software that runs continuously across global networks on thousands of redundant ‘nodes’. These projects are generally decentralized, with no leadership or central node that can be approached in order to enforce any sort of âbanâ. A government might as well try to ban sunrise.
the Tax plan for American families would require transactions over $ 10,000 in cryptocurrency to be reported to the IRS. US law already requires trades and businesses must report cash payments over $ 10,000.
Cryptocurrency is considered “property” for federal income tax purposes and it is treated as capital property and applicable capital gains must be recorded continuously, even for small transactions, lawyer Joe carlasare mentionned.
âI don’t see the requested proposal to report transfers of at least $ 10,000 of cryptocurrency to the IRS as a move to slow the market,â he told VERIFY. âThe main concern of the Biden administration is the underreporting of tax obligations. There is public data showing significant underreporting of tax obligations related to earnings made from cryptocurrency trading. In my opinion, the IRS is trying to capture this income. “
He also said that if the government wanted to shut down or slow down the market, “the most drastic measures they could take would be to shut down public cryptocurrency exchanges.”
âBy controlling the entry and exit ramps to trade local currencies for crypto, it would be difficult for citizens to buy crypto. However, this is not the approach that most governments take. Most governments allow exchanges to work as long as “ Know Your Customer ” (KYC) the procedures work to assess customer risk and there is compliance with anti-money laundering (AML) laws, âCarlasare said.
Carlasare said we should pay attention to how governments outside of the United States regulate or adopt cryptocurrencies, especially China and the European Union. The Chinese government recently reiterated their regulations on cryptocurrency, prohibiting companies from making crypto transactions. A Chinese citizen can still buy or own virtual currency.
âIt’s a developing industry and there remains legal uncertainty in the space. Cryptocurrencies are here to stay, but we should expect regulators to continue to provide appropriate advice as this new asset class matures, âCarlasare added.
Our journalists strive to separate fact from fiction so you can understand what’s right and wrong online. Please consider subscribing to our daily newsletter, text alerts and our YouTube channel. You can also follow us on Snapchat, Twitter, Instagram or Facebook.