US Infrastructure Bill: Impact on Crypto
Crypto investors need to be aware of how a new US law impacts on the sector.
The $1.2 trillion infrastructure bill, recently signed by President Joe Biden, captured a lot of headlines, but not everyone noticed the measures aimed at crypto investors and exchanges.
Under the legislation ‘brokers’ (aka cryptocurrency exchanges) will have to issue a 1099-B. That means crypto exchanges will have to tell the IRS directly about crypto transactions.
Experts believe this will create tax reporting challenges for many crypto investors. For example, traders who use their own crypto wallet may find the information handed to the IRS contains inaccuracies. This is because the exchange’s reporting on trading activity will only have a limited view of what investors paid for crypto in the first place.
What should crypto investors do?
If you want to stay on the right side of the law, and you should, then there are two major factors to consider.
Firstly, keep track of what you originally paid for your crypto, and keep it as accurate as possible, so you can reconcile your records with what the exchanges report to the IRS.
Secondly, consider finding a tax professional with crypto knowledge. This could help ensure even greater accuracy and assist you in being as transparent as possible about what cryptocurrency you hold and what you paid for it.
The IRS already considered cryptocurrency taxable property, this new reporting requirement makes it even more important for crypto investors to ensure they report activity accurately and completely.
The massive drop in value of Bitcoin and Ethereum in the hours after Biden signed the bill into law recovered slightly by mid-week.
It is thought the fall in value is more likely to relate to the general volatility of crypto rather than the new US law.
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