Biden’s 2023 budget proposal seeks to apply accounting and tax reporting rules to crypto

The Biden administration is submitting a budget proposal for the 2023 financial year. The budget proposal comes as the US Treasury Department releases its revenue explanations.

It is estimated that the US government will generate revenues of around $11 billion over the next decade. In 2023 alone, around $5 billion in revenues will be generated. These funds will come from employing financial accounting and reporting practices in the digital asset sector.

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Billion-dollar revenues from taxing crypto

The Biden administration estimates that $6.6 billion worth of revenues will be generated from the crypto space between 2023 and 2032. The revenues will be generated from the active trade of cryptocurrencies.

Mark to market rules appraises the value of an asset depending on market conditions. The value can be significantly high or low, given the volatile price movement of crypto assets. The Biden administration also requires that US residents report offshore accounts holding more than $50,000.

The Treasury noted,

The global nature of the digital asset market offers opportunities for US taxpayers to conceal assets and taxable income by using offshore digital asset exchanges and wallet providers.

The US will also require US banks and financial institutions to comply with reporting requirements at the Internal Revenue Service. The shared information will include the value held by non-residents and foreign individuals owning business organisations. The Treasury notes that this will target residents and citizens who want to avoid US tax reporting by creating entities.

The Treasury also wants to generate $2 billion in additional revenues over the next decade through “third-party information reporting.” It notes that this will combat the use of digital assets in tax evasion.

Regulating crypto lending products

The Biden administration also wants to ensure that cryptocurrency loans will follow the same rules as the traditional lending market. This will ensure that crypto loans are not subjected to gains or losses.

Cryptocurrency lending products have become highly popular because they offer higher yields than traditional banks. However, the crypto lending space has been scrutinised by federal and state bodies. This budget proposal will go into effect at the beginning of January 2023.