The U.S. Senate has included a proposal to tax Bitcoin and other cryptocurrencies in the latest version of a bi-partisan infrastructure bill.
The Senate’s 2,702-page infrastructure bill released Sunday evening (August 1) includes a proposal for increased information reporting for cryptocurrency exchanges, or “brokers” of cryptocurrency transactions, as well as proposed tax measures on digital assets.
If passed, the proposed law would require cryptocurrency exchanges to file an information return reporting all transactions. The proposed legislation would take effect in 2023, giving exchanges a year and a half to get ready to meet the new reporting requirements.
The U.S. government is taking steps to gain more Information about who is holding and trading cryptocurrencies with a view to taxing capital gains on the sale of digital coins similar to the way in which capital gains on stocks are currently taxed.
The proposed legislation, if passed, would have a significant impact on both investors and cryptocurrency exchanges.
Cryptocurrency exchanges will need to comply with the new reporting regime. And, under the new law, all of the information that the Internal Revenue Service (IRS) would normally receive when an investor sells a share of Amazon stock, for example, will now be sent to the IRS when an investor sells one Bitcoin, Ethereum, or another cryptocurrency.
