Regulator's fist threatens to strike down cryptocurrencies

By: Bharggavi Ssayee

Regulator's fist threatens to strike down cryptocurrencies

June 11, 2021 8:19 AM

The US tax authorities want a say in the regulation of cryptocurrencies and seek the approval of Congress. A serious threat?


Around the world, the threat of tightening cryptocurrency regulation is growing. On the occasion of the fall in the price of BTC in mid-May, several central bankers called for regulation.


In the United States, the pressure is also mounting. And several US government agencies are calling unambiguously for new rules. This is particularly the case with the Commissioner of the IRS, the authority in charge of tax enforcement.


The IRS "Often Challenged"

Charles Rettig, named under Donald Trump, was speaking this week before the US Senate Finance Committee. The commissioner was notably questioned by a senator on the ability of the IRS to regulate or not the world of cryptocurrencies.


As it stands, the answer is rather negative. According to Rettig, American authority "needs the authority of Congress." But the IRS Commissioner does not stop there, and suggests that parliamentarians could endow the agency with that authority.


"We are often challenged, and it is essential that Congress clearly dictate to us the powers we have to collect" information relating to crypto-assets, underlines the senior official.


But above all, he would like to remind you, the cryptocurrency market can no longer be neglected because of its size. Charles Rettig thus points out that it still recently exceeded 2,000 billion dollars and had 8,600 exchanges in the world.


Regulation, a negative signal for the market

"And by design, most virtual cryptocurrencies are designed to stay off the radar screen, so we will be challenged," he insists. To do its job, including tax collection, the IRS needs power and means.


“We do need more tools, and we absolutely need more resources,” says his boss. Will this call from the feet of the Fisc be heeded by the politicians of the Congress?


The prospect of tighter regulation is not new. However, she seems to be getting more insistent. And this is explained in particular by the capitalization reached by cryptocurrencies. In addition, even on the decline, cryptoassets are now long-lasting and out of fashion.


The scenario of new crypto legislation is unlikely to please investors, however. These prospects, real or fantasized, have already had a downward effect on prices, including Bitcoin, on several occasions.