Biden’s 2022 budget includes new crypto reporting proposals

Proposed cryptocurrency regulations are in the first budget released by Joe Biden's White House.

President Joe Biden’s 2022 budget proposal includes several new crypto reporting requirements, according to a pair of documents published Friday.

The budget published Friday, the first from the Biden administration, includes two proposals that would give the Treasury Department additional requirements around what type of information financial institutions must report to the Internal Revenue Service (IRS) or other Treasury sub-departments.

The first proposal, mentioned in the White House budget itself, would “expand broker information reporting with respect to cryptocurrency assets.”

A Treasury Department “Green Book” provided more context, saying the proposed change would “expand the scope of information reporting by brokers” by allowing them to share information across different jurisdictions that have partnered with the U.S.

The document states:

The proposal would require brokers, including entities such as U.S. crypto asset exchanges and hosted wallet providers, to report information relating to certain passive entities and their substantial foreign owners when reporting with respect to crypto assets held by those entities in an account with the broker.

Gross proceeds, sales and “substantial foreign owners” in passive entities would be included in these reports.

The proposal would take effect for returns filed after Dec. 31, 2022, according to the document.

“Tax evasion using crypto assets is a rapidly growing problem. Since the industry is entirely digital, taxpayers can transact with offshore crypto exchanges and wallet providers without leaving the United States,” the Treasury Department document said as an explanation for the proposal.

Information reporting

The 2022 budget includes several other crypto reporting requirements, according to the Treasury document.

The second proposal to introduce a “comprehensive financial account reporting” structure for tax compliance purposes, would require financial institutions to report data on user accounts with a breakdown on different types of transfers above a de minimis threshold of $600.

This would include crypto asset exchanges and custodians, the document said.

“Separately, reporting requirements would apply in cases in which taxpayers buy crypto assets from one broker and then transfer the crypto assets to another broker, and businesses that receive crypto assets in transactions with a fair market value of more than $10,000 would have to report such transactions,” the proposal said.

The budget comes just over a week after the Treasury Department proposed that financial institutions and other businesses which receive transfers of over $10,000 in crypto to report those to the IRS. The proposal is similar to a Financial Crimes Enforcement Network proposal as well.