White House is coming out in support of the “disastrous” crypto tax amendment that crushes industry
Some comments said a crypto tax “disastrous” amendment backed by White House – also representing President Joe Biden – and proposed by Senators Rob Portman and Mark Warner could wreck the crypto industry.
White House reportedly supports only minor changes to the crypto tax amendment
The U.S. Senate reviews two amendments to a contentious cryptocurrency provision tucked within a $1 trillion infrastructure bill. Depending on which they choose to adopt, Proof-of-Stake validators and protocol developers could be exposed to new tax reporting requirements.
The infrastructure bill sought to pay for an estimated $28 billion of its proposals by changing the tax code to list as a broker is responsible for and regularly provides and services effectuating transfers of digital assets. And Senators Ron Wyden, Cynthia Lummis, and Pat Toomey proposed an amendment that would exempt Bitcoin miners, cryptocurrency validators, protocol developers, and wallet creators from that provision.
However, as the infrastructure bill approaches the voting date, the provision’s sponsor, Portman, proposed his own amendment along with Warner. The revision shows that cryptocurrency developers and Proof-of-Stake validators will still be subject to extensive reporting and taxes. While the rival amendment maintains the exclusion for Proof-of-work miners, validators on Proof-of-stake networks such as Cardano and Ethereum 2.0 would still be subject to new reporting requirements, as would protocol developers. The move threatened to undo the lobbying efforts of the cryptocurrency industry and added another twist to an already dizzying story.
And not too long ago, Washington Post economics reporter Jeff Stein announced that the White House formally supports their amendment.
Late breaking – White House is coming out formally in support of Warner-Portman-Sinema crypto amendment, implicitly against the Toomey-Wyden-Lummis plan
— Jeff Stein (@JStein_WaPo) August 6, 2021
If this information is true, the White House does not support a rival amendment proposed by Lummis, Toomey, and Wyden. In it, their proposal provides a much broader list of exemptions, including for any entity validating distributed ledger, entities developing digital assets or their corresponding protocols, as well as miners.
The White House on crypto amendments | Source: Pat Ward
Pretty much everyone thinks Warner and Portman’s much more limited revision is a disaster. Furthermore, it received widespread condemnation from the crypto community, with many onlookers emphasizing that the new legislation will catch Proof-of-work networks and software developers.
Some have even criticized that this is a red flag. A provision that’s so poorly written it could crush the cryptocurrency ecosystem and dramatically expand US government surveillance has been added to the must-pass bipartisan infrastructure package at the last minute.
Jerry Brito, the executive director of the cryptocurrency think tank Coin Center, said the Portman-Warner amendment is “disastrous” and does not exclude software developers from onerous brokerage reporting requirements. Brito said the Portman-Warner amendment would only exclude Proof-of-work mining and not Proof-of-stake mining.
If this passes this is the U.S. Congress picking winners and losers.
— Jerry Brito (@jerrybrito) August 5, 2021
The Blockchain Association also noted the amendment would compete with the Lummis-Wyden amendment and thus split Senate support for the Lummis-Wyden amendment:
Congressman Ted Budd, Warren Davidson (R-OH), Tom Emmer (R-MN), Darren Soto (R-FL), William Timmons (R-SC), and Anthony Gonzalez (R-OH) also urged their Senate colleagues to back the Lummis-Wyden-Toomey amendment to ensure innovation continues to thrive in America.
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