The last few months have been full of challenges and innovations in the cryptocurrency industry. The US SEC has delayed many BTC ETF applications, raising fears that the delay will severely damage all cryptocurrency projects.
It seems that this fear is already strongly expressed. The total market capitalization of cryptocurrency decreased by 7%. This came precisely 24 hours after US President Joe Biden officially unveiled the country’s 2021 blockchain infrastructure bill. About $3 billion has been removed from market capitalization since the law was introduced.
The good news, though, is that the Token TTA has already been passed in the US Senate. The Token Taxonomy Act will exempt crypto startups from paying capital gains tax, with annual revenues over $500,000. After this act, the market capitalization of cryptocurrency increased by 15%.
The new infrastructure bill is facing some criticism for the hefty taxes it imposes on crypto investors. The bill aims to raise $1 trillion through various tax increases and other sources of revenue that, according to the statement, will be spent on developing America’s infrastructure.
The government has some specific targets. However, Biden is likely to rely heavily on billionaires like Facebook’s Mark Zuckerberg and Amazon’s Jeff Bezos to bring in more crypto money. This idea is one of the new concepts of crypto. The bill forces all crypto-investors in the U.S. to notify the IRS of a certain amount of everything. Currently, many people do not fix crypto taxes, and this bill aims to rectify this.
The noise around cryptocurrency is now louder than ever. There were 17 cryptocurrencies this year, with a total market capitalization of more than $1 billion. People are getting rich by investing in Bitcoin, Etherium, and other cryptocurrencies. For most investors who joined the crypto space in 2017 or earlier, wealth is not guaranteed. This means that they have not yet paid capital gains tax.
Things Crypto Investors Should Consider
The bill obliges cryptocurrency exchanges to file tax returns on cryptocurrency transactions. Businesses should report the cost of payments in dollars, the value of cryptocurrency transactions, and both in comparison to each other. This means that cryptocurrency exchanges will have to compile detailed financial statements that support their valuation. And these assessments must be certified by the CPA. This is pretty good news for cryptocurrency investors and exchanges.
The bill also requires cryptocurrency exchanges to report all transactions worth $10,000 or more in cryptocurrency to a government agency. Businesses will also have to provide additional information to the government agency about consumers and their markets. This story caused protests and dissatisfaction among many crypto lovers.
New Standards for Cyber Security
The bill introduces new reporting requirements for anyone who trades in more than $20,000 a year in virtual currency. In addition, new federal standards for cybersecurity are outlined. Repeals the 2015 provision that allowed people to avoid most taxes.
Cryptocurrency exchanges will have to get approval from the government before they can start. However, the bill does not specify what kind of approval exchanges should receive. It should be noted that there is no answer in the bill as to whether the SEC will approve the deal. The bill allows crypto-miners, like any other business, to deduct their costs from taxes.
The response from cryptocurrency enthusiasts to the bill, as expected, has been mixed. We wonder how effective this move will be for both traders, investors, and the United States.