The administration of US President Joe Biden proposed obligatory data collecting on foreign crypto investors operating in the United States in order to prevent tax evasion.
The Treasury Department, in its “Greenbook” of revenue proposals released on 28 May, proposed a requirement for cryptocurrency brokers, such as exchanges and hosted-wallet providers, to provide information to the IRS on foreign individuals indirectly holding accounts with them.
According to the US Treasury Department, this will improve interaction with foreign tax services and supervisory agencies. The United States will be able to provide this information to foreign governments and in return receive information about US residents who hide crypto assets and evade their tax obligations in the United States using offshore exchanges and wallets.
“The global nature of the crypto market offers opportunities for U.S. taxpayers to conceal assets and taxable income by using offshore crypto exchanges and wallet providers,” the Greenbook proposal reads.
“They clearly feel that right now there’s a blind spot for foreign owners,” said Jorge Castro, a tax attorney at Miller & Chevalier Chartered who previously worked at the IRS and as a Democratic tax counsel on Capitol Hill.
The move is part of a campaign launched by President Joe Biden’s administration to strengthen tax compliance and improve cybersecurity. White House spokeswoman Jen Psaki said on Wednesday that cryptocurrencies require more detailed analysis to deter cyberattacks. The presidential administration says Biden has already launched an operational strategic review to respond to the increased threat of ransomware, including expanding cryptocurrency analysis to identify and track criminal transactions.