What does the infrastructure bill mean for crypto?

President Biden signed the new $1 trillion infrastructure bill, which is set to modernize infrastructure across the United States, but cryptocurrency is also involved.

The crypto provisions in the infrastructure bill are generating a lot of confusion among cryptocurrency traders and companies, while it remains unclear how it will affect tax reporting requirements for cryptocurrencies.

However, today, with the help of a crypto tax CPA, we will cover what this new infrastructure bill means for cryptocurrencies.

Infrastructure Bill 2021

The recently signed trillion-dollar infrastructure bill brings a lot of ambition to renovate and build the next era of infrastructure in the United States, from bridges to airports.

But why is encryption included? Let’s find out.

What does a cryptocurrency infrastructure bill mean?

There are two requirements in the Infrastructure Code that will have a significant impact on cryptography:

(1) 1099-B reporting requirements for crypto brokers.

(2) Expand US Tax Code Section 60501 to include digital assets.

Explain coding infrastructure bill

The reporting requirements of crypto brokers are causing confusion among the players, as this will increase the reporting requirements from miners to traders.

Increasing regulations in the crypto sector have been greatly discussed across countries, particularly in relation to KYC/AML procedures. With the rise of decentralized finance, these concerns with financial authorities (for example, central banks) are on the rise.

The bill for cryptocurrency infrastructure goes in that direction, but the scalability of these practical measures can backfire and hinder innovation and progress in the crypto industry. Let’s explore the new requirements for crypto brokers first.

Explanation of the infrastructure bill encryption broker

There will be new reporting requirements for crypto brokers after the bill for the new cryptocurrency infrastructure.

Crypto brokers such as exchanges (for example, Coinbase) have issued 1099-MISC forms to traders who have a high volume of cryptocurrency trading during the tax year. However, this form only contains the total amount sold/traded during the year and not any individual trade reports or other individual business information such as cost basis.

The new 1099-B reporting requirement will change this, and will require exchanges to issue a tax report with all individual trades made by users, including detailed information such as sales revenue and the cost basis for each trade. This reporting requirement will create an enormous level of reporting burden and complexity.

Most likely, this will create a huge mess because it is almost impossible for exchanges to know your cost basis unless you trade on this exchange exclusively or never convert currencies in or out of this exchange.

In other words, the 1099-Bs issued by the exchanges are more likely to be incorrect, and the burden will be on the taxpayer to prove otherwise. In addition, the definition of crypto brokers in the infrastructure bill is too broad, which will create a huge burden and negative impact on the crypto ecosystem.

If you received a 1099-B from a crypto exchange you used and know that the gains/losses reported on the form are incorrect, you can resolve them by:

1) seek advice from a qualified crypto tax accountant;

2) Use a crypto tax software like CoinTracking to import all your crypto transactions and generate a valid tax report for your crypto gain/loss.

Explanation of the Infrastructure Code 60501 Cryptographic Section

Section 60501 requires people who receive more than $10,000 in cash and cash equivalents to file a report with the IRS. Section 60501 will be an additional requirement for US cryptocurrency traders, corporations, and investors.

One of the issues that emerged directly is the treatment of digital assets as a “cash equivalent,” which goes against the IRS’ decision that cryptocurrency is property rather than cash for tax purposes.

Also, the new reporting requirement will place a heavy burden on individuals, companies, and exchanges that receive more than $10,000 in cryptocurrency. It will also violate people’s privacy as Section 60501 requires that details, such as who paid the recipient, names and Social Security numbers be reported.

Any failure to report details about those sending payments is a criminal offence. Let’s look at an example:

Just imagine you NFT . Creator, and you sell a lot of your NFTs for hundreds of thousands or even millions of dollars. The NFT platform you use (for example, OpenSea) will be required to collect personal information such as the name and Social Security number from each buyer who has purchased more than $10,000 of NFT from you from you. That would likely make people reluctant, if not unwilling, to buy NFTs, wouldn’t it?

Do you need personal help? Check out our full service with a professional CPA for cryptocurrency:

CoinTracking also offers a full service for US cryptocurrency traders. A crypto settlement tax expert from Polygon Advisory Group, a leading US tax firm, will review your CoinTracking account, help fix any errors, and ensure your crypto tax reports are submitted flawlessly.

Be 100% Crypto Tax Compliant with CoinTracking: Best Crypto Tax Software

Currency Tracking Covers all your crypto-tax needs. Our crypto tax software makes it easy to import your trades, calculate your winnings, and generate appropriate tax reports.

CoinTracking supports over 100 exchanges, including DeFi, NFTsAnd Smart Binance SeriesAnd matic, and much more.

after Import all your crypto dealsCoinTracking automatically calculates your crypto capital gains and losses, while you can choose from 12 accounting methods (for example, FIFO, HIFO, HMRC, ACB), depending on which country you are in.

Moreover, CoinTracking can be generated ready to go tax reports for your country.

Do you have any questions about crypto taxes? Check out the best guides:

  1. Do you pay taxes wTrading of stable chickens?

  2. How is yield farming taxed?

  3. DeFi Taxes: The Complete Guide.

  4. How to save taxes with a Bitcoin IRA.

  5. Do you pay taxes to receive bitcoin tips?

  6. Uniswap . Tax Guide

  7. Is cipher wrap taxable?

  8. How do you calculate taxes at the average dollar cost of bitcoin?

  9. Do you pay taxes on stolen, hacked or lost cryptocurrency?

  10. FIFO for Crypto Taxes? The implications of accounting methods.

  11. NFT Taxes: The Complete Guide.

  12. NFT Guide 2021 (with taxes).

  13. Is bitcoin taxable? The Ultimate Guide to Taxes for 2021.

  14. Do You Pay Taxes on Bitcoin Debit Card Purchases?

  15. The most tax-friendly countries for cryptocurrency.

  16. How do you reduce your crypto taxes?

  17. Crypto tax loss harvest: Here’s what you need to know

Disclaimer: All information provided above is for informational purposes only and should not be considered professional, legal or tax advice. You should do your own research or consult with a professional financial advisor when investing.

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