U.S. politics and policy updates
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U.S. lawmakers are divided on how to tax and supervise cryptocurrency transactions, and this dispute may slow the passage of Joe Biden’s $1 trillion bipartisan infrastructure bill.
The White House called for the closure of the so-called Tax gap -The difference between the tax owed to the U.S. government and the tax actually paid-A number of measures have been adopted, including the requirement to report large cryptocurrency transfers to the U.S. Internal Revenue Service.
The Biden administration said the crackdown will raise tens of billions of dollars in revenue and help pay for the president’s ambitious spending plans, including $1 trillion infrastructure package This will invest heavily in the reconstruction of roads, bridges, railways and broadband.
The White House estimates that the cryptocurrency reporting requirements alone will add an additional $28 billion to the U.S. Treasury Department.
But lawmakers are deeply divided on the details of the report’s requirements. The dispute crossed partisan boundaries, aroused investor anger, and prevented the passage of a broader infrastructure package.
Senators are expected to work over the weekend and next week to postpone their planned summer vacation in an effort to negotiate cryptocurrencies and dozens of other controversial amendments. The final infrastructure bill still needs to be approved by the House of Representatives before it can be submitted to Biden for signing into law.
Earlier this week, Democratic Senator Ron Wyden of Oregon, who chairs the Senate Finance Committee, and Republicans proposed an amendment to the infrastructure bill. Pat Toumi And Cynthia Lummis to clarify the definition of “broker”.
The Senator’s amendment stipulates that “only those who trade on exchanges where consumers buy and sell digital assets” need to report to the IRS. Legislators stated that the drafted bill was too broad and would impose improper reporting requirements on other players in the industry, such as those who mine cryptocurrency or those who sell hardware or software.
But their efforts ran into obstacles on Thursday, when Democratic Senator Mark Warner and Kirsten CinemaProposed a competitive bipartisan amendment with Republican Senator Rob Portman.
Warner’s amendment may force developers and so-called blockchain verifiers to report tax on blockchains that rely on a “proof-of-stake” network. The Wyden amendment does not include verifiers, software and hardware vendors, and digital asset developers who do not maintain customer assets.
This amendment will pose a huge threat to Ethereum, which is the foundation of the thriving decentralized financial world.Ethereum plans to convert to a proof-of-stake system A set of updates It is expected to be the fastest this year.
Bitcoin runs on a different “Proof of Work” system that uses so-called miners to verify transactions. The Warner Amendment specifically excludes such miners from tax reporting requirements, but does not provide any exemption for the proof of equity verifiers.
In a rare intervention, the White House said late on Thursday that it supported Senator Warner, Cinema and Portman’s amendments.
White House Deputy Press Secretary Andrew Bates said that the government is “satisfied” with the progress of the “production” of the senator’s proposal. Bates said the government “thanks” Wyden, but “substitutes the amendment.” .. Strike the right balance and take an important step forward in promoting tax compliance”.
However, the Warner Amendment was strongly resisted by cryptocurrency advocates, who stated that it would push many blockchain projects outside the United States and impose unfeasible demands on developers.
One of the largest investors in cryptocurrency start-ups, Andreessen Horowitz, stated that the Warner Amendment would be “a staggering loss to the United States and our ability to maintain the position of the world’s innovation center.”
The company said in a statement: “This amendment will stifle U.S. innovation, but these decentralized agreements will continue to be built, developed, and expanded by teams around the world.”
Toumi told reporters on Capitol Hill late Thursday that the lawmakers were “in a deadlock.”
He added: “They want to apply this in a way that we think is too broad, doesn’t work, shouldn’t be done, and will cause harm. They don’t agree.”
It is still unclear on Friday whether these two amendments will be adopted as part of the final legislation, but White House Press Secretary Jen Psaki reiterated the Biden administration’s support for the Warner amendment.
She told reporters: “We believe this regulation will strengthen tax compliance in this emerging financial sector and ensure that high-income taxpayers pay the taxes they owe in accordance with the law,” she added, adding that the White House “of course will closely monitor And keep in close contact. “As the discussion continues.”
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