The US House of Representatives has blocked all attempts to change the tax rules for Bitcoin and other digital currencies included in President Joe Biden’s infrastructure plan.
Bitcoin is stumbling and the latest news from Washington could be responsible. Last Tuesday, the Democrats in the US House of Representatives rejected any changes to the US infrastructure law. A few weeks earlier, the Senate had passed a bipartisan infrastructure law that is intended to finance a wide variety of projects – including the construction of bridges, roads and the treatment of clean water.
In order to finance this project, those who own digital assets such as Bitcoin are now to be included. As a result, all constructs called brokers would now have to submit forms to the United States Federal Tax Service (IRS) on behalf of their customers. In addition to crypto exchanges, miners, stakers and protocols from Decentralized Finance (DeFi) would also be affected. Forecasts suggest that this could generate up to $ 28 billion in tax revenue.
Setback for the crypto space
These requirements can certainly be met for centralized exchanges such as Coinbase or Binance. However, crypto lobby groups like Coin Center argue that the new definition of the broker is too broad. Coin Center criticizes that the new definition of the broker also includes those who are responsible for processing transactions on the blockchain.
The lobby sees the problem in the fact that it would be simply impossible for Bitcoin miners, stakers and decentralized protocols in particular to get all the data that the IRS requires. Given the decentralized and pseudonymous nature of blockchains and cryptocurrencies, it would be impossible for these actors to adhere to these requirements, according to the crypto lobby. Data protection groups followed this tenor and described the law as a back door for increased financial surveillance.
A previous motion by the crypto lobby last failed in the Senate after it was blocked by 87-year-old Alabama Senator Richard Shelby. While the Treasury Department under the Biden administration has reportedly indicated that it will not enforce tax reporting requirements for miners and the like, crypto lobby groups and Coinbase’s tax chief are of the opinion that the House of Representatives should have changed the draft law.
Many crypto advocates had hoped that the House of Representatives would adjust the tax reporting requirements and comprehensively revise the draft law. It is now clear that this hope was in vain – but there is still a chance to revise the draft.
Anna Eshoo gives hope to the Bitcoin lobby
Democratic MP Anna Eshoo issued a statement calling for the law to be defined more precisely.
I will continue to examine all possible ways of improving the erroneous definitions within the Infrastructure Act.
In addition to the politician, the managing director of the Blockchain Association, Kristin Smith, also called for a rethinking of the formulation of the crypto law.
Instead of clarifying a phrase that isn’t even law, we encourage the House of Representatives to reject the bill. Only by working with the Bitcoin and crypto industries can the US continue to be among the leading innovators.
It is now too late to reject the draft at the level of the US House of Representatives. MPs voted 220 to 212 for the $ 3.5 trillion economic stimulus bill. Joe Biden had already promised that he would sign the bill if the House of Representatives approves it. As the Washington Post reports, the crypto lobby is now planning to use the budget law to influence the law after all.