Tax changes are coming for crypto investors. Last month, President Biden signed the U.S. infrastructure bill into law. Among a long list of provisions, the new law includes some key tax reporting changes that will impact crypto investors and brokers. For example, under the new law, all cryptocurrency exchanges will be viewed as traditional brokers for the purposes of taxation. In addition, digital assets totaling $10,000 or above will be viewed as cash for the purposes of taxation.
In this segment of Backstage Pass, recorded on Nov. 17, Fool contributors Connor Allen, Travis Hoium, and Rachel Warren discuss the impact of tightened regulations on crypto investors, as well as recent clamp-downs by China on the crypto community.
Connor Allen: Anything that makes people money will be regulated and will be taxed and that can be expected. But about my concern, I’m really not too concerned about it being regulated because I knew that this was always going to happen.
I just want to hit on the point of de-centralization and how big that is for the crypto industry. It’s not about not being regulated. It’s about nobody controlling the money supply. I understand that China might be doing a little bit of that, but being taxed on it, is not the same thing as China cracking down and not allowing mining or not allowing crypto whatsoever.
China gives me a little bit of concern but for the U.S. regulation really nothing to be too worried about. Honestly, I think that the new regulation that we’re seeing gives merit to crypto industry as a whole. The more regulation it has, the more the government believes in this thing. Everybody believes in this thing and so it develops that merit that people have been wanting to see from crypto.
With regulation, everybody will learn to navigate it just as they’ve learned to navigate the regulation in the past on all kinds of asset classes. Now, I’m not a big fan of regulation in general, but I really don’t think it’s going to be huge problem for a lot of crypto investors or anybody that’s in that space.
Obviously one thing is that a lot of regulators might not know a ton about cryptocurrency. That could be a reason for concern. You see some of these things that they’re talking about trying to understand crypto and trying to talk about crypto. You are like, do you know what you’re talking about? It doesn’t seem like they have a good grasp on it.
Especially one thing with Bitcoin ETFs and regulation and all that good stuff is they are allowing a futures Bitcoin ETF to be out there, but they’re not allowing an actual price point Bitcoin ETF to be out there.
That has me a …….