Crypto industry faces a larger problem in the shape of infrastructure bill. US Congress is currently looking for ways to fund an infrastructure bill, which aims to strengthen national railways, tunnels and bridges. One way to raise funds is to close loopholes that permit cryptocurrency holders to dodge taxes.
Officials complain that crypto transactions can evade taxes because of weak reporting standards. Digital assets such as Bitcoin are considered assets by the IRS, meaning that each transaction is subject to capital tax.
The Senate bill contains a provision that aims to raise taxes by $28 billion by forcing more companies to collect tax information. According to IRS officials, additional tax information will help track cryptocurrency earnings.
On Wednesday, Sens. Ron Wyden, D-Ore., Pat Toomey, R-Pa., and Cynthia Lummis, R-Wyo, introduced an amendment that drills down on the definition of a “broker,” explicitly excluding validators, hardware and software makers as well as protocol developers. It would be a win for the crypto caucus, should it pass.
In the other camp sits Sens. Rob Portman, R-Ohio – who drafted the original tax provision – along with Mark Warner, D-Va. and Kyrsten Sinema, D-Ariz. They submitted their own rival amendment on Thursday. Their proposed amendment remove miners and sellers of hardware and software wallets from the bill. However, the wording of the amendment suggests that crypto developers and proof-of-stake validators will continue to be subject to extended reporting and taxation.
The White House Weighed In
Somewhat out of the blue, The White House came in on a contentious battle over competing crypto amendments to the $1 trillion infrastructure bill. It’s chosen to back the side that isn’t as friendly to the world of bitcoin and ethereum.
The White House came out in support of the Warner-Portman plan, claiming that it “strikes the right balance” and makes an important step toward enhancing tax compliance.
— Pat Ward (@WardDPatrick) August 6, 2021
Senator Cynthia Lummis calls crypto community:
“We NEED you. Pls call your Senators. Pls tweet. Pls email. We are facing major headwinds on the Wyden-Lummis-Toomey amendment. Burying financial innovation in red tape & sending devs + miners on info collection wild goose chases for info they don’t know is horrible policy.”
We NEED you. Pls call your Senators. Pls tweet. Pls email. We are facing major headwinds on the Wyden-Lummis-Toomey amendment. Burying financial innovation in red tape & sending devs + miners on info collection wild goose chases for info they don’t know is horrible policy. https://t.co/7GRNIUkpKs
— Cynthia Lummis 🦬 (@CynthiaMLummis) August 6, 2021