US Lawmakers Propose Tax on Crypto Transactions

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  • US lawmakers have proposed a new bill that can earn them up to $28 billion from taxation on crypto transactions.
  • Crypto veterans argue the bill would be “hugely problematic.”
  • The bill targets such a broad range of users that miners and DEXs can also be included.

The US lawmakers have proposed a new infrastructure bill that can earn them up to $28 billion from taxation on crypto transactions. According to a report on the matter, the money collected would fund a portion of the $550 billion investment in transportation and power systems.

The proposed law would further enforce tighter regulations on crypto firms and exchanges, requiring them to report crypto transactions of more than $10,000 to the Internal Revenue Service (IRS). Earlier this year, the Biden administration’s proposal mandated cash and crypto-assets transactions of over $10,000 to be reported to the IRS.

Following weeks of negotiation and discussion among Democrats and Republicans over how to fund the infrastructure deal, they eventually agreed on bringing the crypto measure. Implementing tougher rules on cryptocurrency trades was a priority of both parties, including the President’s Treasury Department and the lead Republican in the infrastructure talks Sen. Rob Portman.

Senator Rob Portman asserted that almost everyone in Congress is concerned regarding the transparency around the crypto industry, adding this had a role in hastily adding the new measures. “Everybody’s been talking about the appropriate way to provide more reporting in particular and that leads to better compliance,” he said.

A number of crypto veterans have already expressed dissent and negative reactions toward the proposed bill. Crypto experts believe the bill is, in a large context, non-implementable as the crypto firms don’t have the required resources to do so.

The Bill Could Be Problematic

Kristin Smith, executive director of the Blockchain Association, said the proposal could be “hugely problematic.” She added the crypto community is going all the way to change it. She stated:

While improvements to our nation’s infrastructure are important, the hastily drafted language around revenue raising provisions in the infrastructure package could have unintended consequences that strike at the heart of innovation in the cryptocurrency ecosystem, risk driving jobs overseas, and may jeopardize Americans’ Fourth Amendment protections.

Jerry Brito, executive director at Coin Center, also pointed out some huge challenges that the bill would add to the mainstream crypto users. “Unfortunately, in the drafts we’ve seen, the category of persons who would be obligated to report is so broad that it potentially covers persons who only provide software or hardware to customers and who have no visibility whatsoever into users’ transactions,” he said.

Brito further added that the bill might even target miners and DEXs. “It potentially also covers miners and DEXs. The saving grace is that arguably miners (and DEXs for that matter) do not have ‘customers’ as defined in the tax code. We worked all day yesterday trying to fix and will continue to do so today,” he asserted.