Fed chair Jay Powell warned against ‘illegal activities’ associated with cryptocurrencies
New proposals by the Biden administration will require cryptocurrency transfers above $10,000 to be reported to US tax authorities.
The news comes in the aftermath of a regulatory crackdown in China, which caused the price of bitcoin to plummet.
The crash took the price of bitcoin to below $40,000, and occurred alongside a slump in the wider crypto market.
Chair of the Federal Reserve Jay Powell gave his view on the matter, arguing that authorities in the US should be “paying attention to private-sector payments innovators who are currently not within the traditional regulatory arrangements applied to banks, investment firms, and other financial intermediaries”.
He also warned against “illegal activities” that he suggested cryptocurrencies could encourage, in a smaller vain to comments from the European Central Bank earlier in the week.
Biden’s proposal is part of a report by the Treasury highlighting the administration’s plans to close the “tax gap” by giving more power to the Inland Revenue Service. Many of the proposals are aimed at extracting more revenue from America’s wealthiest tax payers.
Jay Powell has also pushed forward proposals by the Federal Reserve to create a digital dollar that would be controlled by the US central bank.
“The effective functioning of our economy requires that people have faith and confidence not only in the dollar, but also in the payment networks, banks, and other payment service providers that allow money to flow on a daily basis,” he said.
“Our focus is on ensuring a safe and efficient payment system that provides broad benefits to American households and businesses while also embracing innovation.”
Powell’s comments come amid increasing focus on the possibility of central bank digital currencies (CBDCs) being implemented across the world.