People who invest in cryptocurrencies are getting nervous about stricter U.S. crypto tax reporting requirements that will take effect January 1, 2019.. While cryptocurrency is a new asset class, the increased regulations could be a sign of things to come as digital currency gains more mainstream acceptance and investors become aware of the risks associated with it.
While people should comply with all federal laws, there’s a chance for companies and government agencies alike to adopt blockchain technology for record keeping purposes. In fact, according to CNBC, one of the provisions in the U.S. Infrastructure Bill expands the section of the U.S. tax code that requires people who receive more than $10,000 in cash and cash equivalents to file a report with the IRS from the organization that gave them the money.
In a similar fashion, blockchain technology can be used as a watchdog for transactions and company records. As people become more familiar with digital currency, it’s likely they’ll use their account to record receipts and expenses related to business deals or other ventures. While this will help them keep better track of their money, it may come at a price if a person doesn’t properly report their income to the IRS.
It’s important to note that reporting requirements for cryptocurrency vary from country to country based on the rules in place by law enforcement agencies and various government administrations.. In many cases, cryptocurrencies are treated as property instead of legal tender because they’re considered objects of value than an actual currency. This means that the same tax rules that apply to stocks, real estate and other forms of property also apply to digital currency.
The bottom line is that investors need to be aware of the tax implications before investing in cryptocurrencies and should seek professional advice if they’re not sure how to proceed. While it’s possible that stricter regulations could hamper the growth of digital currencies in the short term, it’s likely that these currencies will continue to grow in popularity as more people become familiar with their benefits and use cases.