It sounds like satire: a bill with the official name “The One Big, Beautiful Bill” quietly tucking a remittance tax into page 327 of a 389-page document. But this proposal is no joke for crypto users and money service businesses (MSBs). Especially if your business facilitates cross-border crypto transfers or serves immigrants and overseas workers.
Let’s break down what’s in this bill, how it impacts crypto, and why now’s the time for the industry to speak up.
The Hidden Remittance Tax: 3.5% Withholding on Funds Sent Abroad
At the heart of the controversy is a 3.5% excise tax on all cross-border remittance transfers from non-U.S. citizens. That’s right—if you’re on an H-1B visa, a green card, or another non-citizen status, and you send money overseas (to family, to invest, whatever), this bill proposes your provider (e.g., crypto exchange, traditional remittance app) withhold 3.5% of that transfer as tax.
Originally set at 5%, the rate was walked back after pushback from diaspora communities and advocacy groups. Still, 3.5% is significant. It comes on top of existing fees, which means money sent back home could arrive notably lighter.
Crypto platforms that enable cross-border transfers—including exchanges like Coinbase and Kraken—would likely be considered remittance transfer providers under existing definitions. Which brings us to crypto’s conundrum.
Why Crypto Voices Are Missing—And Why That Needs to Change
Most headlines are focused on the bill’s broader economic goals.. But there’s been a notable absence of response from the crypto industry.
This is a mistake.
The remittance tax may have flown under the radar, but it poses a real threat to some very core crypto values: privacy, autonomy, and frictionless cross-border payments. If passed as written, it could also drag crypto exchanges into a new role they never signed up for—government tax collectors.
Organizations like the Money Services Business Association (MSBA) are already raising the alarm, as have other industry groups and immigration advocates. More crypto leaders should join them.
Three Big Issues the Bill Creates for Crypto MSBs
1. Privacy Invasion
To exempt a user from the tax, platforms would need to verify that person is a U.S. citizen. That means collecting additional personal data—proof of citizenship—from senders. In other words: more surveillance for Americans, not less.
Ironically, Americans must disclose more than foreign users to avoid the tax. This privacy inversion flips the logic of consumer protection on its head.
2. Administrative Burden on MSBs and Crypto Platforms
If you’re a licensed crypto MSB, this tax means new documentation burdens. Effectively, you would need to:
• Identify which transactions qualify as cross-border remittances
• Collect and retain citizenship verification supporting documentation
• Report and remit taxes to the U.S. Treasury
That’s a heavy lift particularly for small and mid-sized platforms already managing complex KYC/AML obligations. For businesses relying on tiered KYC—a common approach among both traditional and crypto MSBs for small transactions—this bill could disrupt their current model and necessitate a recalibration of tiers and associated requirements.
“This tax is turning crypto exchangers into essentially deputized tax collectors for the federal government”
—Joe Ciccolo, Founder BitAML
3. Collateral Damage: Military Families and Global Workers
Let’s not forget the human element. American servicemembers deployed overseas and foreign-born residents sending funds home could be unfairly burdened.
It’s one thing to target tax evasion. It’s another to charge a fee on money being sent to support parents, children, or spouses abroad. The optics here are not great.
The Deputized Tax Collector Problem
Under the current language, crypto exchanges and traditional money transmitters would effectively become agents of the IRS—collecting, verifying, and remitting taxes on behalf of the federal government.
Think of it like your local coffee shop which collects and holds sales tax on behalf of the state, which it then later sends to the state treasurer’s office. Except instead of lattes, it’s crypto remittances—and instead of state tax, it’s federal surveillance tied to citizenship status.
And here’s the kicker: there’s no minimum threshold. Even small-dollar remittances could be taxed. That’s especially punishing for consumers that rely on small but frequent transfers to support family overseas.
Crypto’s Core Promise Is Under Threat
This proposal undercuts one of the crypto industry’s strongest selling points: the ability to send fast, affordable, cross-border payments without intermediaries or high fees.
Instead, we’d be layering on new compliance expectations, new identity documentation requirements, and a new federal tax regime that chips away at crypto’s utility and ethos.
“It takes away from the very key attributes of cryptocurrency that the industry and its advocates have long touted”
—Joe Ciccolo, Founder BitAML
For an industry that has championed financial inclusion, this tax is a step in the wrong direction.
What Should Crypto Businesses Do Now?
If you’re a crypto MSB operating in the U.S., start preparing. That means:
• Evaluating whether you’d qualify as a remittance transfer provider
• Updating your compliance policies, procedures, and protocols
• Tuning your compliance systems to identify covered customers and transactions, and
• Mapping out the operational costs of compliance if this tax becomes law
• Joining industry groups like MSBA to advocate for smart changes or exemptions
And if you’re a consumer? Ask questions. Pay attention to how your provider handles data, reporting, and taxes. The tools you choose today could shape how much privacy and freedom you have tomorrow.
At BitAML, we help crypto businesses stay ahead of complex regulations without losing their edge. If you’re unsure how a proposal like this could affect your AML program, operations, or risk profile, let’s talk. Schedule a complimentary discovery call with our team. Let’s protect crypto’s future—and your business.
