Elizabeth Warren and Bernie Sanders call for the closure of the 'crypto tax gap,' amounting to $50 billion

United States senators, such as Elizabeth Warren and Bernie Sanders, assert that cryptocurrency tax evaders are diverting billions away from the government.

Numerous United States lawmakers have emphatically called upon the Internal Revenue Service and the Treasury to accelerate the closure of tax loopholes exploited by "crypto tax evaders."

In a letter dated August 1, Democratic Senators Elizabeth Warren, Bernie Sanders, Bob Casey, and Richard Blumenthal delivered a resolute message to the highest-ranking officials of both agencies, stressing the urgent need for new tax regulations to be swiftly enacted.

These senators assert that there exists a staggering "$50 billion crypto tax gap," and caution that the IRS and Treasury stand to forfeit approximately $1.5 billion in tax revenue for the 2024 fiscal year if any delay occurs in updating tax policies.

They adamantly declare, "In the absence of prompt action, tax evaders and the crypto intermediaries willing to assist them will persist in manipulating the system, exploiting its loopholes, and diverting billions of dollars annually from the U.S. government. We cannot afford to grant them that opportunity."

The senators are specifically referencing the new tax provisions outlined in the Senate's $1.2 trillion infrastructure bill, which was passed in August 2021. This legislation aimed to heighten tax reporting requirements for businesses functioning as crypto brokers.

"Nearly two years have elapsed since the law's enactment, and the implementation deadline looms less than six months away, yet the Treasury has not yet issued proposed regulations," the letter underscores.

Despite the bill having been signed into law, the Treasury and the IRS have not yet released the updated tax rules. While the agencies are obligated to publish and implement these rules by December 31, the lawmakers are forcefully urging for their expedited implementation.

Elizabeth Warren has emerged as a vocal critic of the cryptocurrency industry in the United States, even establishing an "anti-crypto army" as a focal point of her Senate re-election campaign.

Though Bernie Sanders has maintained a relatively lower public profile on crypto compared to his Democratic colleagues, he has joined Senator Warren in endorsing multiple letters aimed at imposing stricter regulations within the crypto space.

A recent poll commissioned by Grayscale Investments has revealed that 59% of Democrats and 51% of Republicans view cryptocurrency as the future of finance. This suggests that Senator Warren's stance may not resonate as a winning proposition among the majority of the population.