Treasury pushes global crypto data-sharing rules in budget bill

According to Treasury, the proliferation of shell companies that U.S. taxpayers set up overseas to try to avoid tax, including on cryptocurrency gains, requires stricter reporting measures.

“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. U.S. taxpayers also attempt to avoid U.S. tax reporting by creating entities through which they can act,” according to Treasury’s “Greenbook,” as its annual list of revenue proposals is known. “To combat the potential for crypto assets to be used for tax evasion, third party information reporting is critical to help identify taxpayers and bolster voluntary tax compliance.

Reciprocal access

To get access to that information, however, U.S. officials need to be able to provide the same data toother countries on their own citizens with U.S. accounts, part of what are known as “tax information exchange agreements.” The Treasury proposal would enforce the new rules starting inin 2023 and apply to cryptocurrency exchanges and providers of digital “wallets”for account holders. Such “hosted” wallet providers include trading and investment platforms like Coinbaseand Gemini.

The new system would be similar to obligations under a 2010 law that requires certain foreign financial institutions to report information on U.S. taxpayers accounts to the IRS, according to the administration official. The issue has come up in discussions with the tax-writing committees, House Ways and Means and Senate Finance.

Democrats are searching for ways to generate revenue that can cover the cost of their massivebudget package that’s expected to addresschild care, clean energy, paid leave, Medicare and other major pieces of Bidens domestic policy agenda. Top Democrats including Speaker Nancy Pelosi have said they want the bill to be fully paid for, and moderates in both chambers are raising concerns about its price tag.