The IRS Wants To Centralize Your Decentralized Finance

Four Assorted Cryptocurrency Coins

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The U.S. Treasury is wasting no time trying to get control of crypto transactions and the world of decentralized finance (DeFi). Its new report, The American Families Plan Tax Compliance Agenda, shows just how serious the IRS is about the threat to its bottom line: "Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion," reads the report. "This is why the President's proposal includes additional resources for the IRS to address the growth of cryptoassets."

The main selling point of DeFi is that all transactions are automatic, regulated only by the terms of smart contracts and, importantly, without central authorities. If you're wondering, in the U.S., the IRS is "the" central authority. Clearly, they are not pleased about DeFi.

To shamelessly plug my new eBook, I cover this topic from several angles in my new best seller, Blockchain - Cryptocurrency, NFTs & Smart Contracts: An executive guide to the world of decentralized finance. (It's only $2.99, and you can do well by doing good, as I'm donating the proceeds to Girls Who Code. They are building the world's largest pipeline of female engineers.)

This new report is the opening gambit from the U.S. Government. Unsurprisingly, it is dealing with the symptom (potential lost tax revenue), rather than the cause. For the IRS to truly do what they say they are intending to do, America will need to adopt financial policies indistinguishable from China's recently publicized DeFi policy.

Pay attention to this. It is a fight that will escalate quickly. Taxes are the lifeblood of every government. You can't monitor or verify DeFi transactions unless you monitor internet access. It might be time to reread 1984. Have a great weekend.

Cnet has more about this below:

Biden proposes IRS disclosure of all crypto transactions $10,000 and up

As part of an $80 billion effort to update IRS auditing abilities, the American Families Plan wants to bring crypto transfers into the light of day.
By Ry Chris.
 

The US Treasury on Thursday released a detailed report outlining proposed changes to IRS reporting requirements, as laid out in the Biden administration's American Families Plan. Among numerous other changes intended to "raise revenue, improve efficiency and build a more equitable tax system," the legislation includes new rules for reporting the exchange of cryptocurrencies like Bitcoin (BITCOMP). 

Specifically, should the bill become law, you'll need to report those transfers to the IRS when they exceed $10,000 -- the same reporting threshold for cash deposits. The Treasury says the move will help curb tax evasion and other crimes.

"Cryptocurrency already poses a significant detection problem by facilitating illegal activity broadly including tax evasion," reads the Treasury's report. "This is why the President's proposal includes additional resources for the IRS to address the growth of cryptoassets." The move is part of an $80 billion effort within the American Families Plan to enhance the ability of the IRS to conduct audits, which administration officials say could generate as much as $700 billion over the next decade.

Continue reading on Cnet.

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