The Treasury Department’s delay in implementing a law designed to catch cryptocurrency tax evaders is raising concerns.
What Happened: The law, aimed at closing a loophole that allows cryptocurrency investors to evade taxes, was projected to raise $28 billion over a decade.
As a result of the most recent delay, it may be too late for it to be effective for the tax year 2024, The Wall Street Journal reported.
The recent decline in cryptocurrency prices may have impacted this figure.
Why It Matters: The tax rules form part of the administration’s strategy to ensure that cryptocurrency investors adhere to the same rules as other investors.
However, the delay has drawn criticism from Democratic members of Congress, including Senators Elizabeth Warren, Bob Casey, Richard Blumenthal, and Bernie Sanders.
“These new rules were urgently needed when President Biden signed them into law in 2021. Over the past two years, that urgency has only intensified,” said the Senators in writing.
Without these rules, tax evaders and crypto intermediaries could exploit loopholes and cost the U.S. government billions of dollars each year.
The Treasury Department and the Internal Revenue Service had stated in December that brokers would not have to report any information until the administration issues final rules.
However, more than seven months later, the Treasury has not yet issued a proposal, which would start a lengthy process before the final rules are in place.
“The delay has raised concerns about the potential impact on federal revenue and the ability to effectively regulate the cryptocurrency market,” said Benzinga.
“Cryptocurrencies have captured the attention and imagination of a new generation of investors across the globe. From Bitcoin to Ethereum to the growing list of altcoins, there’s little question that the volatile and fast-moving crypto industry keeps participants, observers, and regulators on edge,” said CNBC.
“More and more, though, mainstream companies are looking at cryptocurrencies and adjacent technologies as a way to tap into new markets—or to create them from scratch in new, virtual worlds,” added CNBC.
Produced in association with Benzinga
Edited by Priscilla Jepchumba and Judy J. Rotich