Cryptocurrency lovers, including Twitter’s Jack Dorsey, Elon Musk, Brian Armstrong, and Ted Cruz, have condemned Joe Biden’s proposed crypto tax regulation. The infrastructure bill that is close to being passed by a bipartisan U.S. Senate aims to raise $28 billion from crypto taxes.
A rare cooperation between Democrats and Republicans sneaked in a bill that tightens tax compliance within the crypto sphere. The critics argue that the effort was rushed. They singled out the part that declares someone “responsible for and regularly providing any service effectuating transfers of digital assets” to be a broker, subjecting them to tax reporting requirements.
Warning about unintended outcomes
They argue the definition is so ambiguous that it could force cryptocurrency miners, developers, and all digital asset companies to gather user information. This, they say, is impossible in the Decentralized Finance system. Sen. Ted Cruz stated on Saturday:
“The infrastructure deal contains DANGEROUS provisions that would devastate crypto and blockchain innovation.”
Coinbase, Square, Ribbit Capital, and several other stakeholders wrote a joint protest letter warning of the unintended outcomes on cryptocurrency developers and miners. Privacy-minded digital rights organizations Fight for the Future, and Electronic Frontier Foundation added their voices to the condemnation.
Winners and losers in the crypto industry
After the outcry by the cryptocurrency community, several influential senators proposed an amendment to clarify the new reporting rules. Senators Ron Wyden and Pat Toomey have proposed an amendment to clarify the reporting regulations.
The amendment clarifies that blockchain technology and wallet developers would get included in the bill. The two senators want Bitcoin miners, network validators, and other providers exempted from the requirement to report to the Internal Revenue Service (IRS).
The intentions could become disastrous
Coinbase CEO Brian Armstrong argued the move was guaranteed to go wrong as the government was “trying to pick winners and losers in a nascent industry today.” He appealed to senators via Twitter to support the Wyden-Lummis-Toomey amendment and keep the crypto industry thriving. Armstrong believes that all U.S. citizens ought to be paying taxes. He argues against the intention to make the cryptocurrency industry a source of tax revenue. Armstrong believes this could become disastrous to the “exciting innovations in the process.”
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Tom is a long-serving freelance writer who specializes in the blockchain and cryptocurrency niche. You may even call him a crypto-enthusiast with over 10-years’ experience in content creation, blog writing, and SEO. He is a philosophical figurehead who believes that to make our world a better place, we must invest in incorruptible products and procedures, of which Bitcoin and other cryptocurrencies are leading examples.