US Unveils Cryptocurrency Regulation Measures: Mandatory Reporting for Transactions Over $10,000 (Comprehensive)

US Requires IRS Reporting for Transactions Over $10,000
ECB Warns "Cryptocurrencies Have No Value"
China Announces Crackdown on Crypto Mining Following Ban
Experts Say "Regulatory Risks Increase... Cryptocurrency Market May Stabilize Long-Term"

Janet Yellen, U.S. Secretary of the Treasury
Photo by Reuters Yonhap News

[Asia Economy Reporter Kim Suhwan] The U.S. Treasury Department plans to mandate reporting to the Internal Revenue Service (IRS) for cryptocurrency transactions exceeding $10,000. Amid expectations of intensified regulatory trends worldwide, the Treasury Department's announcement on this day is seen as the start of full-scale crackdowns on cryptocurrencies.

On the 20th (local time), the U.S. Treasury Department issued guidelines requiring all cryptocurrency transactions over $10,000 to be reported to the IRS, pointing out that "cryptocurrencies are widely facilitating illegal activities, including tax evasion, causing problems." This is interpreted as a determination to close tax loopholes that may arise during the expansion of cryptocurrency trading.

The Treasury also explained that businesses receiving virtual assets with a fair market value of $10,000 or more must report to the IRS, just like cash transactions.

The Biden administration is actively working to secure tax revenue to promote large-scale infrastructure development plans while cracking down on tax evasion. The guidelines announced on this day are also analyzed as part of these efforts. There have been ongoing expectations that the Treasury and the Securities and Exchange Commission (SEC) will take a more active stance on cryptocurrency regulation. Additionally, the Biden administration's announcement to double IRS personnel over the next decade is also seen as a factor that will strengthen taxation on cryptocurrencies.

Ed Millis, an analyst at global financial group Raymond James, said, "Regulatory risks surrounding cryptocurrencies are showing signs of being re-discussed," adding, "In the short term, this will be a factor threatening the cryptocurrency market."

Earlier, Treasury Secretary Janet Yellen mentioned at the Senate confirmation hearing earlier this year, "Many cryptocurrencies are believed to be primarily used for illegal finance," and said, "It is necessary to consider ways to reduce such use and prevent money laundering."

Moreover, the IRS has been taxing capital gains from cryptocurrency trading for U.S. individuals since last year.

Alain Bokobza, chief investment advisor at Societe Generale, said, "The biggest threat to Bitcoin is regulation." Economist Paul Shear also analyzed, "The volatility in cryptocurrency prices amid the tightening regulatory atmosphere highlights the regulatory risks currently facing the cryptocurrency industry."

[Image source=Reuters Yonhap News]

Calls for Regulation in Other Countries

Not only in the United States but also in other countries, voices calling for regulation are growing.

Luis de Guindos, Vice President of the European Central Bank (ECB)
[Photo by Reuters]

The ECB warned of a cryptocurrency bubble, likening the recent price surge to the "Tulip Mania." In a report released on the 19th, the ECB stated, "Investment concentration in cryptocurrency assets is excessive," and "There is a high risk of use in illegal transactions." Luis de Guindos, Vice President of the ECB, also emphasized in an interview with Bloomberg on the 19th, "The value of cryptocurrencies should be considered virtually nonexistent," and "Investing in cryptocurrencies is not an investment."

Additionally, China has banned the issuance and trading of private cryptocurrencies such as Bitcoin and is moving to ban cryptocurrency mining as well. According to local media, the Inner Mongolia Autonomous Region in northern China began operating a cryptocurrency mining site registration system on the 18th. The regional government stated that this measure aims to achieve energy-saving goals. This is interpreted as a signal to intensify crackdowns on cryptocurrency mining sites, which have been continuously criticized for power wastage.

Earlier, the Inner Mongolia Autonomous Region announced a policy to expel all cryptocurrency mining sites within the region by the end of this year.

Mining cryptocurrency refers to performing complex computational processes using computers to receive cryptocurrency as a reward, likened to mining minerals in a mine. In particular, research has shown that the electricity consumption used for mining exceeds the annual power consumption of countries like Argentina and Sweden, raising criticism about the power wastage problem of cryptocurrencies.

[Image source=Reuters Yonhap News]

Chinese President Xi Jinping has set a goal to achieve carbon neutrality by 2060, making energy conservation a national core agenda. As part of this, there is a high possibility of a strong regulatory drive against cryptocurrencies. According to the Alternative Finance Centre (CCAF) at the University of Cambridge in the UK, as of April last year, 65.08% of global Bitcoin mining was conducted in China. Analysts suggest that if mining site regulations expand from Inner Mongolia to other key mining regions such as Xinjiang and Sichuan Province, the overall impact on the cryptocurrency market will be significant.

However, despite China's strong regulatory warnings, there are also views that these may not be fully realized. The practical difficulty lies in cracking down on all cryptocurrency transactions, which constitute a small portion of the billions of daily financial transactions in China. NBC reported on the 20th that Chinese people can still trade cryptocurrencies through overseas cryptocurrency exchanges.

According to the U.S. Congressional Research Service, countries that have completely banned cryptocurrency trading, including Bitcoin, currently include Algeria, Bolivia, Morocco, Nepal, Pakistan, Vietnam, Egypt, Iraq, and the UAE.

Expert: "Regulation Could Grant Legal Status to Cryptocurrencies and Stabilize the Market"

Amid this regulatory trend on Bitcoin, attention is also focused on the future outlook of the cryptocurrency market. Analyst Millis predicted, "The regulatory trend on cryptocurrencies will create a more systematic regulatory framework in the long term," adding, "This could grant legal status to cryptocurrencies and ultimately stabilize the cryptocurrency market."

The future price trend of cryptocurrencies is also a key point of interest. Jeffrey Halley, chief analyst at OANDA, said, "The $40,000 price point for Bitcoin will be an important benchmark," adding, "If it maintains stability in the $40,000 range, investors may return." However, he warned, "If the $30,000 level collapses, it will trigger another sharp decline across the cryptocurrency market."

This content was produced with the assistance of AI translation services.