New crypto tax measures will raise $28 billion to fund Senate bipartisan infrastructure deal

An additional $28 billion in taxes would be raised from cryptocurrency transactions, according to the United States Senate’s bipartisan infrastructure deal that would impose stricter rules on digital asset investors. 

Stricter crypto guidelines supported by both parties

Key senators announced a bipartisan infrastructure deal that aims to invest $550 billion in funds for transportation, broadband and utilities, which is down from the $579 billion as the initial plan that was announced in June. 

The bill will be funded by a mixture of “targeted corporate user fees” and increased tax enforcement on cryptocurrencies, according to the White House. 

The target on cryptocurrencies was the latest addition to the infrastructure deal after discussions were held regarding the possible methods of funding it. 

The new plan would raise $28 billion from digital asset transactions. More rules would be imposed on cryptocurrency platforms to report the new asset class transfers to the Internal Revenue Service (IRS). 

Businesses would be required to report cryptocurrency transactions of over $10,000. Last month, IRS Commissioner Charles Rettig asked Congress to provide more clarity on collecting data for virtual currency transfers with values over $10,000. 

Setting stricter guidelines on digital asset trading has been a priority for both parties, including the Joe Biden administration and the lead Republican, Senator Rob Portman of Ohio. Portman added that concerns around the transparency of the new asset class had been highlighted in Congress for some time, hence the addition of the measure to the deal. 

He stated that there had been an exchange of views on the “appropriate way to provide more reporting” and compliance around cryptocurrencies. 

The Biden administration has been requesting banks and crypto exchanges to report digital currency transactions to the IRS. 

In an effort to reduce the widening tax gap, the Treasury is further cracking down on tax evasion involving digital assets, with the department calling for transactions over $10,000 to be reported to the IRS. 

Commissioner Rettig estimated that the tax gap is around $1 trillion a year and that profits from the surge in digital asset prices earlier this year have escaped the IRS.