Cryptocurrency and the US government have never really been able to go through one door. The unwillingness of the US to include cryptocurrency and blockchain effectively in its laws and regulations would inhibit innovation and drive out startups. However, it now appears that the Internal Revenue Service (IRS) is going to adjust its guidelines for the tax declaration with regard to cryptocurrency, a step in the right direction according to some.
At the moment, the IRS, the American tax authorities, sees cryptocurrency as “assets”, with which it falls into the same category as, for example, a house. Americans can follow IRS guidelines while filing a tax return. However, the cryptocurrency guidelines date from 2014 and are therefore considerably outdated.
According to the Wall Street Journal, the IRS will soon come up with new guidelines. In a letter to Congressman Tom Emmer, the organization wrote that the new guidelines address “methods for calculating taxes and other issues.”
With the revised guidelines there may be more clarity about how cryptocurrencies are classified by the tax authorities. Yet the US is far behind when it comes to regulations regarding crypto and blockchain.
Facebook chooses Switzerland
As a result, many projects prefer other countries over the US. For example, Facebook previously decided to establish the Libra Association, the association behind the new cryptocurrency Libra , in Switzerland. The fund that must guarantee the value of Libra will also be established in Switzerland.
One of the reasons for this is that Switzerland, like a few other countries, has already implemented a detailed framework for blockchain and cryptocurrency. In this way the country offers more possibilities and freedom for such projects. In Switzerland, for example, ‘Crypto Valley ‘ can be found in the city of Zug, an area where a large number of blockchain and cryptocurrency projects have settled.
A few US regulators have seen this and are therefore trying to adjust the regulations within the country. Senators Todd Young and Ed Markey, for example, developed the Blockchain Promotion Act of 2019. During the introduction of this law in February this year, Young said:
Blockchain has the potential to be a catalyst for sustainable economic growth of all industries in America. If America leads this development, we can ensure that its benefits are shared everywhere. Blockchain has the potential to not only provide financial and economic benefits at home, but also humanitarian and social support in developing countries will benefit from American leadership.