The U.S. Senate is about to vote on the Biden administration’s infrastructure bill. The bipartisan infrastructure plan may introduce ‘disastrous’ changes to the cryptocurrency regulation, in particular tightening the crypto tax reporting requirements.
America’s leading crypto voices argue that voting the wrong way could push the industry out of the country.
The amendments to the crypto tax reporting of the bill didn’t make it to the Senate floor over the weekend. But the Senate will continue to consider. They may have the final vote on the amendments “until Monday night into Tuesday morning,” according to CNN. Also, the crypto provision and other amendments will be dealt with before the final vote.
The infrastructure bill wants to raise $28 billion in tax from crypto over a decade. Therefore, It requires crypto entities to provide customer information and help report those who hold crypto. There are two major amendments to the crypto provision of the bill.
One amendment, which the crypto industry supports, wants only custodial entities like crypto exchanges to have the reporting obligation. This would exclude non-custodial entities like Bitcoin miners, DeFi protocol developers, Ethereum wallet operators.
Another amendment, which Biden supports, wants to exempt those that help run Proof-of-Work (PoW) blockchains, like Bitcoin miners. But this would oblige proof-of-stake (PoS) entities like nodes, Ethereum 2.0 validators and protocol developers to report customer information.
Amendments on Crypto Tax Exemptions in Senate Infrastructure Bill
Jerry Brito, executive director of Coincenter, a crypto think tank, called the latter amendment “disastrous.” Crypto exchange giant Coinbase CEO Brian Armstrong echoes that language. Armstrong believes the latter amendment including miners, validators, smart contractors and open-source developers among brokers ”makes no sense.”
Tesla and SpaceX CEO Elon Musk also agrees with Armstrong. “This is not the time to pick technology winners or losers in cryptocurrency technology. There is no crisis that compels hasty legislation,” Musk says in a tweet.
“Software developers, node operators, miners, and others […] can not practically comply with crypto tax reporting obligations. Because they don’t have the requisite information to do so,” Cameron Winklevoss, co-founder of crypto exchange Gemini, says in a tweet.
After a large industry outcry, the latter amendment, or the Warner-Portman amendment, has extended the exemption to PoS networks. But it does not exclude any other consensus mechanisms, like Solana’s “Proof of History” mechanisms.
Sam Bankman-Fried, founder and CEO of FTX, describes the revision as “a mess, but also some progress.” “There also doesn’t exist an exception for developers, who again don’t know anything about the state of taxes of users of a decentralized blockchain,” SBF tweeted.
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