Bitcoin Falls to Three-Week Low as IRS Seeks Approval for Reporting Rules on Cryptocurrency Transfers

Bitcoin fell to a three-week low on Tuesday amid signs of institutional investor caution, while the head of the US Internal Revenue Service called for lawmakers to provide authority for tighter reporting rules on crypto transfers.

IRS chief Charles Rettig said on Tuesday that Congress needs to provide clear statutory authority for the tax agency to collect information on cryptocurrency transfers valued at over $10,000 (roughly Rs.7.2 lakhs) that largely go unreported.

Rettig said before the Senate Finance Committee that cryptocurrency market capitalisation is over $2 trillion (roughly Rs. 1,45,84,300 crores), with more than 8,600 exchanges worldwide. "By design, most crypto virtual currencies are designed to stay off the radar screen, so we will be challenged right now."

Earlier a spokesperson for British fund manager Ruffer Investment Management confirmed that it exited its Bitcoin bet in April with a $1.1 billion (roughly Rs. 8,020 crores) profit amid worries over risk after quick gains in the cryptocurrency's price.

Ruffer made its Bitcoin bet, priced in India at 12pm IST on June 9 at Rs. 24.5 lakhs, in November, in what was then one of the largest signals of rising institutional interest in the digital currency. By mid-December it was worth around GBP 550 million (roughly Rs. 5,680 crores).

"Long term, we remain interested in digital assets and the role they can play in real wealth preservation," the spokesperson said. "In the short term, following the sharp increase in the Bitcoin price, we felt Bitcoin was exhibiting more risk."

Ruffer's Bitcoin profit was first reported by The Sunday Times.

Meanwhile, MicroStrategy, a major Bitcoin corporate backer, has increased the size of a junk-bond sale to help buy more Bitcoin, now targeting $500 million (roughly Rs. 3,650 crores), Bloomberg News reported on Tuesday.

Bitcoin was last trading at $32,055.20 (roughly Rs. 23 lakhs), down 4.5 percent on the day. It bottomed at $31,025 (roughly Rs. 22.6 crores), the lowest price since a shakeout on May 19 dropped it to near $30,000 (roughly Rs. 21.8 lakhs) for the first time since January.

© Thomson Reuters 2021