Tucked inside President Biden’s proposed budget are four new tax reporting requirements on crypto.

The U.S. Treasury is proposing to expand tax treatment for securities lending involving crypto, require more tax reporting on foreign owners in crypto transactions, expand reporting tax requirements for foreign crypto accounts in excess of $,, and allow actively traded digital assets to be marked to market — where the price reflects its current market value at the end of the trading day.

Treasury would not classify crypto as a security or a commodity, but rather it would be treated as its own asset class.

“A digital asset would not be treated as a security or commodity for purposes of the mark- to-market rules and would therefore be eligible for mark-to-market treatment only under the rules applicable to the new third category of assets,” according to the Treasury.

President Biden’s proposed budget includes four new tax reporting requirements on crypto. Creative

Treasury Secretary Janet Yellen and her delegates would have authority to determine which digital assets are treated as actively traded, according to the Treasury, including whether the asset is regularly bought and sold for U.S. dollars or other fiat currencies, the volume of trading of the asset on exchanges that have reliable valuations, and the availability of reliable price quotes.

The Treasury estimated the crypto tax provisions could raise $ billion over ten years with nearly half the revenue coming from the change in the mark-to-market rules.

“This is an acknowledgment that this is a serious asset class,” said Roger Brown, global head of tax strategy for Chainalysis and a former special counsel for the IRS specializing in international tax and financial products. “It’s an acknowledgement that they’re a mature asset class that should be treated on par from a tax perspective with traditional financial assets like stocks and bonds. I think it will accelerate adoption of digital assets, web assets as a sensible business model and an asset class.”

Brown said the administration was smart to steer clear of defining crypto as a commodity or a security. Right now, traders have been treating crypto as commodities for tax purposes since the Commodities Futures & Trading Commission has recognized bitcoin as a commodity. However, the IRS has remained silent on whether crypto should be treated like a commodity for tax purposes.

Mark-to-market makes things easier for traders, Brown said. Traders are in and out of their digital wallets and exchanges all over the world. Tracking that activity and original cost basis can be cumbersome.

“In general, these are institutions or individuals that are active traders that just want to get it right and don t want a data headache trying to figure out how do I track basis through all these trading venues,” Brown said.

The new proposals also allow the U.S. and foreign countries to share information about crypto trades made on domestic exchanges and share that information with each other for tax purposes as is done already with the international trading of traditional assets like stocks.

“Although other people who look at the blockchain may not know that I’m trading, the governments will get trading activity, because they re going to see my wallet addresses,” Brown said. “When I withdraw from the wallet from an exchange to stick into a wallet that s going to be reportable with my tax ID number. If I do that in the U.S., it ll be reportable. If I do it overseas, it ll be reportable. So, tax authorities will be able to audit anybody who trades crypto.”

The new measures also crack down on tax evasion through sharing information with foreign countries and vice versa as well as through investors who report real-time asset values in mark to market. Since the industry is entirely digital, taxpayers can transact with offshore digital asset exchanges and wallet providers without leaving the U.S., allowing “taxpayers to conceal assets and taxable income by using offshore digital asset exchanges and wallet providers,” Treasury said.

“These proposals would provide much needed clarity for institutions looking to expand into digital asset business lines,” said Jamison Sites, financial services senior analyst with RSM US LLP. “Over the past few years, several traditional financial institutions have unsuccessfully pursued IRS guidance around the securities lending rules as they apply to digital assets.”

A smartphone display shows the average bitcoin exchange rates against the U.S. dollar, British sterling pound, and the euro during a media opportunity at the Tokyo Bitcoin weekly meeting at a restaurant in Tokyo February , . JAN – BUSINESS SCIENCE TECHNOLOGY POLITICS

Sites said including crypto with securities lending rules will help investors access more traditional banking services and help grow digital assets as more capital is allowed to flow in.

While budgets never get enacted into law, the tax provisions for crypto could be included in other legislation, especially if Democrats advance a narrower version of Build Back Better— the president’s “soft” infrastructure package, according to Jaret Seiberg, an analyst with Cowen Securities.

“None of these strike us as especially radical as they seek to treat crypto similar to other instruments,” Seiburg said. “It is why we believe these provisions could fall into the category of proposals that could get enacted even though the overall budget will not pass.”

These tax reporting requirement proposals come after the infrastructure bill passed last year, which includes a provision to collect taxes on crypto gains by requiring cryptocurrency brokers to report transactions to the IRS in the same way that traditional stock brokers like Charles Schwab and Fidelity do. That provision is estimated to raise $ billion over ten years to help pay for spending infrastructure.