The Crypto Eradication and Corporate Fraud Retribution Act (Hypothetical)

Preamble: To ensure the integrity of financial markets, discourage speculative and potentially illicit activities associated with certain digital assets, and hold accountable high-level corporate executives who defraud investors in smaller public companies, this Act establishes a stringent taxation regime for digital assets and dedicates the resulting revenue exclusively to the prosecution and incarceration of culpable C-suite executives.

Section 1: Taxation of Digital Assets

• (a) Capital Gains and Income: All realized capital gains and income (including staking rewards, mining income, airdrops, and interest) derived from digital assets shall be taxed at a rate of 90%.
• (b) Capital Losses: No capital losses from digital asset transactions may be deducted against gains from digital assets or any other form of income.
• (c) Annual Wealth Tax: An annual wealth tax of 10% shall be levied on the total market value of all digital assets held by a U.S. person (individual or entity) as of December 31st each year, regardless of whether the assets have been sold or generated income.
• (d) Transaction Tax: A 5% excise tax shall be imposed on the fair market value of every digital asset transaction, including purchases, sales, exchanges (crypto-to-crypto, crypto-to-fiat, fiat-to-crypto), and payments for goods or services. This tax is payable by the U.S. person initiating the transaction.
• (e) Reporting: Taxpayers must report all digital asset holdings and every transaction, regardless of value, on their annual tax return with detailed information including dates, values, counterparties (where identifiable), and transaction IDs. Brokers and exchanges must issue detailed 1099 forms for all customer activity.
• (f) Penalties: Failure to comply fully with reporting requirements or tax payments under this section will result in penalties including, but not limited to, a fine equal to 100% of the unreported assets’ value or unpaid tax, plus potential criminal charges including tax evasion. Egregious non-compliance may result in asset forfeiture.

Section 2: Establishment of the Investor Protection and Executive Accountability Fund (IPEAF)

• (a) Creation: There is hereby established in the United States Treasury a separate fund to be known as the “Investor Protection and Executive Accountability Fund” (IPEAF).
• (b) Funding: All revenues collected by the Internal Revenue Service (IRS) under Section 1 of this Act shall be deposited directly and exclusively into the IPEAF. No portion of these funds shall be directed to the General Fund or any other purpose.

Section 3: Purpose and Use of the IPEAF

• (a) Exclusive Purpose: Funds within the IPEAF shall be used solely for the purpose of identifying, investigating, prosecuting, and incarcerating C-suite executives (including but not limited to Chief Executive Officers, Chief Financial Officers, Chief Operating Officers, and Board Chairs) convicted of criminal fraud that demonstrably harmed investors in U.S. publicly traded companies.
• (b) Target Company Size: This funding priority applies specifically to cases involving fraud at companies with a market capitalization of less than $2 billion USD at the time the fraudulent activity predominantly occurred.
• (c) Funded Activities: Expenditures from the IPEAF shall support enhanced investigative resources within the Securities and Exchange Commission (SEC) and the Federal Bureau of Investigation (FBI), dedicated prosecution units within the Department of Justice (DOJ), and the construction, operation, and staffing of a new, dedicated maximum-security federal correctional facility specifically designated for housing individuals convicted under the criteria outlined in this section.

Section 4: Administration and Oversight

• (a) Administration: The IPEAF shall be administered jointly by the Department of the Treasury, the Department of Justice, and the SEC, with oversight from relevant congressional committees.
• (b) Reporting: An annual public report detailing the revenue collected, funds disbursed, specific investigations and prosecutions funded, conviction rates, and the status of the dedicated correctional facility shall be mandated.

Section 5: Severability

• If any provision of this Act, or the application thereof to any person or circumstance, is held invalid, the remainder of the Act and the application of such provision to other persons or circumstances shall not be affected thereby.

Section 6: Effective Date

• This Act shall take effect on January 1st of the year following its enactment.

Summary:

This hypothetical law imposes extremely harsh taxes on all aspects of cryptocurrency (gains, income, holding, transacting) with severe penalties for non-compliance. It then strictly earmarks 100% of the revenue generated into a dedicated fund. This fund’s sole purpose is to finance the investigation, prosecution, and imprisonment—in a purpose-built facility—of C-suite executives convicted of defrauding investors in companies with market capitalizations under $2 billion.