There is a new proposed legislation that would allow banks to provide the IRS all transactions on bank accounts with more than $600. The IRS would have information on every deposit and withdrawal you made in your accounts:
“This proposal would create a comprehensive financial account information reporting regime.
Financial institutions would report data on financial accounts in an information return. The
annual return will report gross inflows and outflows with a breakdown for physical cash,
transactions with a foreign account, and transfers to and from another account with the same
The report goes on to say:
“This requirement would apply to all business and personal accounts from financial
institutions, including bank, loan, and investment accounts,2 with the exception of accounts
below a low de minimis gross flow threshold of $600 or fair market value of $600.“See the report in its entirety HERE,
In essence, every deposit and withdrawal you make would be reported to the IRS.
How do people feel about this? Are you OK with the IRS watching your every transaction? Is the government overstepping their authority? What do you think?
The Rise of Central Bank Digital Currencies
Many feel this plan to monitor transactions over $600 is a sign of what’s to come with central bank digital currencies. Also known as CBDC, it is the virtual format of a fiat currency for a particular nation or region. It is an electronic record or digital token of the official currency and is issued and is regulated by its monetary authority.
So far, nearly 40 nations are working on creating a CBDC, with China leading the pack. While many people have no problem with a CBDC, others fear this will be an invasion of privacy and give governments tremendous control over a person’s finances and overall quality of life.
There are several reasons people feel this way:
- Social Credit Scores. Governments issuing CBDC can create a social credit score. For example, China’s social credit system is a combination of government and business surveillance that gives citizens a “score” that can restrict the ability of individuals to take actions — such as purchasing plane tickets, acquiring property or taking loans — because of behaviors.
- Deposits and Withdrawals Without Consent. CBDC issued by governments can be deposited from accounts and withdrawn at any time as well without the account owner’s knowledge or consent.
- Regulate Spending. Governments can dictate what the CBDC is spent on. If they feel a person is buying too many fast foods or items that are unhealthy, they can prohibit using these monies to purchase those items.
Many feel the monitoring of $600 transactions is to get people used to having their accounts watched by the government. In an attempt to avoid this potential monitoring of their accounts, some are seeking alternative forms of money.Invest For Success: Millionaire Wealth Strategies Not Taught in School (The Success Series)
Gold, Silver and Cryptocurrency
In an attempt to avoid CBDC’s and monitoring by the IRS, some people are looking to get away from the U.S. dollar and exchange their dollars for precious metals and cryptocurrency. Each are outside of the U.S. monetary system. Let’s look at each:
Precious metals such as gold and silver have been used as money for thousands of years. The dollar was once backed by gold, but in 1971 President Richard Nixon removed the dollar from the gold standard, making it a fiat currency, y is a government-issued currency that is not backed by a commodity such as gold.
When owning physical gold and silver coins or bars, they can not be tracked like a CBDC. However, if the gold or silver are converted to a currency like dollars, the transaction would be reported.
Cryptocurrencies have gained popularity for a few reasons: cryptocurrency is outside the existing monetary system, and the anonymity of the transactions. When cryptocurrency transactions are entered into the blockchain ledger by a pseudonym for everyone to see. While they may not be under a person’s name, they can be traced and tracked.
Not all cryptocurrencies are created equal. Some are believed to be more anonymous than others. Here are a few of the most anonymous cryptocurrencies:
- Verge (XVG)
- Moreno (XMR)
- ZCoin (XZC)
- DeepOnion (ONION
- NavCoin (NAV)
- Zen Cash
- Particl (PART)
There are many cryptocurrencies to choose from, and some of the above listed may eventually become worthless. As with any investment, do your own thorough research before making an investment.
Call To Action
The world has changed tremendously in the last 2 years. It is critical we stay abreast of current events and react accordingly. As governments around the world begin toying with a new currency, the need to become financially savvy has increased. This also includes discovering ways to keep money outside of the monetary system. This could protect you from inflation as well these new IRS rules. Will they be implemented? Time will tell.
Learn more about the history of money and various investment strategies in my online course Success Principles 101: The Peak Performance Guide For Physical, Mental, Spiritual and Financial Fitness. Available on Udemy.
By understanding what’s going on today, we can better prepare ourselves for an uncertain tomorrow.