back to article US proposes tracking digital cash and taxing it to pay for, you know, roads and stuff

US senators revised a section of the bipartisan infrastructure bill on Thursday to ensure cryptocurrency miners, hardware vendors, and software developers are exempt from collecting user data required to report taxes. Congress is stepping up its efforts to prevent crypto investors evade their taxes whenever they buy or sell …

  1. Anonymous Coward
    Anonymous Coward

    Any exchange worthy of handling your assets is already gathering and verifying all of this data under Know-Your-Customer auspices. The difference under these proposals is that they'll be reporting it to the taxman so Caesar can take his slice. Little bit odd for the EFF to be fighting this fight.

    1. doublelayer Silver badge

      The EFF is only arguing about who should collect the information. The people moving the money should, not the people who wrote the code. They were right, the bill has been updated to reflect that, and the perfectly logical collection at the point of exchange will occur as it does with any other exchange or investment.

    2. oiseau Silver badge
      Facepalm

      Any exchange worthy of handling your assets is already gathering and verifying all of this data ...

      Of course.

      The US probably does not want Delaware, Montana, South Dakota, Wyoming, New York, etc. to have any sort of competition in the already crowded* Hide Your Money from the Taxman game.

      O.

      * Bermuda, Cayman Islands, Netherlands, Switzerland, Singapore, Ireland, Luxemburg, Curaçao, Hong Kong, Cyprus, Bahamas, Jersey, Barbados, Mauritius, British Virgin Islands and a few other lesser actors.

  2. HildyJ Silver badge
    Meh

    So?

    The original bill was too broad, as the EFF pointed out, but as amended it seems rather normal.

    My broker reports my sales and profits or losses to the IRS on 1099 forms each year. I don't invest in commodities (which is what bitcoin is considered) but I assume commodity brokers have to do the same. Ditto ForEx brokers (if Bitcoin was ever defined as a currency).

    I just can't feel sorry for those who look at Bitcoin as a way to avoid taxes.

  3. Pascal Monett Silver badge
    FAIL

    "Congress is stepping up its efforts to prevent crypto investors evade their taxes"

    And yet :

    "the bill has been altered to make it clear that cryptocurrency miners, blockchain engineers, or vendors selling hardware to run hashing algorithms to mint digital coins are exempt from the new rules "

    Could someone please explain to me the difference between a miner and an investor ?

    It seems to me that those two things overlap rather closely.

    The miner invests in hardware and electricity to get coins. The investor buys coins. In the end, they both have coins, and will sell them at some point. With this bill, the miner will not pay taxes, but the investor will.

    Politician's logic.

    1. Anonymous Coward
      Anonymous Coward

      Re: With this bill, the miner will not pay taxes, but the investor will.

      But surely the miner would need to pay taxes when they convert their bcoins into ordinary money...?

    2. Irongut Silver badge

      Re: "Congress is stepping up its efforts to prevent crypto investors evade their taxes"

      So you would like the miner to pay twice - once when they "mine" the coin and again when they sell it via an exchange.

      Pascal's logic.

      1. Pascal Monett Silver badge
        Thumb Down

        I think you missed this part of my post :

        "In the end, they both have coins, and will sell them at some point "

    3. tfewster Silver badge

      Re: "Congress is stepping up its efforts to prevent crypto investors evade their taxes"

      > ...difference between a miner and an investor...

      Fair question. If you had a gold mine in your back yard*, or created a work of art, you've invested in that but you're not taxed on it until you sell it at whatever the value is at the time of sale.

      An "investor" in this context is someone who is buying; They're only taxed on their profits when they sell.

      * Assuming you own the mineral rights.

    4. doublelayer Silver badge

      Re: "Congress is stepping up its efforts to prevent crypto investors evade their taxes"

      "Could someone please explain to me the difference between a miner and an investor ?"

      Sure. A miner creates a crypto-asset and stores it. An investor buys that kind of asset. Each one has to pay taxes when they sell their asset. Therefore, someone creating the asset doesn't automatically pay taxes when they've created it, but instead only when they sell it to someone else. It's basically the same way that gold or foreign currency work. You can get some gold and hold it for a while, but when you sell it, you pay tax.

    5. Schultz
      Go

      Re: "Congress is stepping up its efforts to prevent crypto investors evade their taxes"

      So they should tax investors whenever they buy or sell to level the playing field. A small tax might greatly reduce the amount of virtual money flitting around. This would, of course, destroy to business model of all the con-men who take their little invisible cut of the money flow. It might also lead people to realize that they are being conned by [insert name of your banker. bitcoin agent. pyramid-scheme peddler], which again would be a good thing. It might restore our focus on actual economic activity once the high-volume, low-value, deliberately complicated money flows get boiled down to actual investments.

      -- It's just a dream.. Carry on as you were. --

  4. elsergiovolador Silver badge

    The rich

    Well, the pleb started to make some serious money, obviously the rich cannot have that.

    Still nothing about billions of tax avoided by FAANG and other big companies.

  5. Anonymous Coward
    Anonymous Coward

    What happens when....

    ....we start transacting and doing business in Cryptocurrency? Sure, go ahead and tax your fiat currency. If I spend a couple Satoshi's on some widgets, well that is my business.

    1. doublelayer Silver badge

      Re: What happens when....

      The government will not care. You live in their country, they assess the taxes. You use a different currency in their country, they still assess their taxes. The only ways around that are to move to a different country, change the tax laws if enough of you agree, or commit tax evasion and see if the government concerned finds out. It is not their currency which gives them the right to require you to pay tax.

      1. Dimmer

        Re: What happens when....

        . The US sent Yellen around recently to convince other governments to have a minimum tax rate or at least similar rates. Competition is the only way to prevent excessive tax to value from governments and they know it.

        If businesses do “price fixing” with other businesses, the government goes after them in the interest of the people.

        Guess this goes to prove the government only remembers it is for the people when it does not interfere with it’s funding.

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