Crypto Industry Shows Proof of Paying Taxes to Counterpart Claims about Risk of Tax Evasion

Due to suspicions highly going on in the market about crypto's potential risk of tax evasion, the industry showed its increasing share of tax and contribution to public finances. 

With crypto as fast becoming an alternative to cash, the US Treasury Department is concerned about how wealthy Americans convert their taxable assets into the crypto industry as their scapegoat in taxes. 

According to tax experts, cryptocurrency tax evasion comes from lax reporting requirements. This also means that unreported transactions of cryptocurrency are not traceable by the Internal Revenue Service (IRS), therefore the income from crypto may not be taxed. 

A statement from the Treasury Department says that about 80% of the U.S. "tax gap" is due to unreported income. This would mean that untraceable transactions of cryptocurrency income contribute to the tax gap. 

Moreover, U.S. President Joe Biden has issued an executive order about the government's crypto regulation. With this agenda, cryptocurrency transactions will be treated as cash, therefore requiring businesses to report their crypto income once they reach $10,000. 

However, crypto companies release their financial statements and shareholder letters. For instance, Coinbase has revealed a tax rate of 6% from its net income of roughly USD 7.35bn for 2021. Meanwhile, from the latest financial statement released by Bitfarm, it has reported a USD 10.9m income tax from a net income of USD 34.7m for the third quarter of 2021. 

According to the Executive Director of CryptoUK, there are still crypto firms that still make use of tax havens; however, he suggested that those are not to avoid paying taxes but due to uncertainties about crypti and tax regulations.

This revealed that even without the reliable calculation of the total amount that the industry pays for its taxes, the crypto industry is making a contribution. Lastly, this would also help in funding the public resources and infrastructures once more sectors fall under regulation.