Crypto experts are not too happy about the new bipartisan infrastructure bill on taxing cryptocurrencies announced Wednesday, 28th July 2021. This will generate almost $30 billion (~£21 billion) in tax revenue, which might be allocated for infrastructure in the future.
The proposal would impose more rules on crypto brokers to report transactions with digital assets, including virtual currencies, to the Internal Revenue Service. It would also require businesses to report crypto transactions of more than $10,000 (~£7,100). This could bring up to $30 billion (~£21 billion) into the bill’s “pay-fors”.
According to lawyer Jake Chervinsky, the bill expands the definition of a “broker” to include “any person who (for consideration) is responsible for and regularly provides any service effectuating transfers of digital assets.” This definition is so broad it could apply to nearly every economic actor in the US crypto industry, including miners. The lawyer mentioned that any DeFi traders will have to pay taxes as well.
Experts are sure that the bill will do far more harm than good. Firstly, there are multiple reasons due to which miners will not be able to meet the IRS requirements.
This means that the US will be throwing a monkey wrench into their own crypto market, since it could mean a de facto ban on mining. China has made a similar mistake already.
For every new dollar of tax revenue, America will lose two (or ten) as the US crypto industry shuts down or goes offshore. And instead of getting more insight into taxable crypto gains, the IRS will get less, as more users “go dark” on unregulated platforms.
And last but not least, this bill simply violates American civil rights.
Executive Director of the Blockchain Association Kristin Smith sent a letter to Congress on the crypto provision in the infrastructure bill. The company implores Congress to reevaluate the language in the bill around the enhanced reporting for brokers and digital assets and asks to keep the US a leader in crypto innovation.
The bipartisan infrastructure bill might seriously harm the crypto industry, since it expands the definition of a broker to include all crypto actors.
Quand j’ai commencé dans les cryptos il y a 3 ans, il y avait plus de 95% d’hommes et encore très peu de femmes, bon ça n'a toujours pas beaucoup changé, mais les choses bougent et je suis fière de representer les femmes dans ce milieu très technique qui est passionnant et plein d'avenir.
The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.
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