The crypto crowd became loud and proud on Capitol Hill

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Cryptocurrency update

The U.S. cryptocurrency industry has just demonstrated an important new capability. It turns out that it can be heard on Capitol Hill.

As the U.S. Senate completes the work of President Joe Biden, the cryptocurrency crowd surges $1 trillion infrastructure planIn the days before the proposal passed on Tuesday, the debate was deadlocked as the industry angrily protested against the tax reporting requirements made to crypto “brokers” to help pay for all maintenance costs.

The industry did not immediately get what it wanted.But it’s still possible, and at the same time, its guerrillas have been angered, which shows how it is in the country’s capital. Taxation and regulation The intensity of cryptocurrency transactions may increase.

Ryan Selkis, CEO of Messari Encrypted Data, said: “We need to destroy encrypted enemies before they destroy us.” Say in tweet During the debate, he added in an interview that he hopes industry advocates can defeat stubborn enemies in the polls.

The cryptocurrency craze is surprising because the Senate has dealt with this issue unexpectedly. Its focus is on infrastructure, and the challenge at hand is to find a way to pay for it without increasing taxes. Some commentators liken this approach to finding change under a federal sofa cushion. In-depth understanding, the Biden administration estimates that the United States can levy 28 billion U.S. dollars in taxes on cryptocurrency investors based on existing laws.

This is where things get tricky. To help ensure that the money is cashed out, the bill requires crypto brokers to issue custom tax forms for reporting investment income to customers and the government. It defines a broker as any person “for consideration”-basically means money-who regularly provides “any service for the transfer of digital assets on behalf of another person”.

The crypto industry flinched from this definition, believing that it is so broad that it encompasses everyone from crypto miners to software developers working on decentralized finance (DeFi) platforms. They said that requiring these people to issue tax forms would push the industry offshore and reduce rather than increase the revenue raised.

The Senate takes these complaints seriously, and considering the adjustment of the industry size, this makes sense. There are many money negotiations and crypto crowds in Washington: Claimed value Of cryptocurrency is close to 2 trillion U.S. dollars.

Even more surprising is that the Senate’s response involved amendments made by rivals made up of two bipartisan members-which is strange in today’s divided United States. Both try to eliminate concerns about people applying broker tags to verify distributed ledger transactions. But some people worry that people who work on the “Proof of Rights” network may be regarded as brokers. This may damage Ethereum, the blockchain that underpins DeFi, because it plans to switch to such a system.

In the end, a compromise was reached, but when the leaders of the Senate sought “unanimous agreement” to put the proposal into practice without slowing down the infrastructure bill, everything fell to nothing. Republican Senator Richard Shelby opposed the mandatory consideration of his national security amendment, but failed.

The infrastructure plan was passed without the encryption industry seeking change, but its advocates still expressed satisfaction. They believe that they have demonstrated influence, slowed down the legislative process, and established support for changing the definition of broker, either in other legislation or through regulation.For this they ensure statement The two main promoters behind the bill-Republican Rob Portman and Democrat Mark Warner-expressed their belief that crypto miners, hardware or software vendors are not crypto brokers.

“We understand that encryption is a force that cannot be ignored,” said Christine Smith, executive director of the Blockchain Association. “Encryption is not just an industry. There is a complete personal network to build and support these networks. It turns out that this is a very organized community.”

However, the final political test of this community has yet to come. Warner pointed out the challenge in his comments, saying that the United States should not allow “the establishment of a shadow financial system that goes beyond the scope of established rules to combat illegal finance and tax evasion.”

This is a real problem. Most of the work in the crypto community today is carried out in DeFi, which uses so-called smart contracts to replace financial intermediaries used by the government to help law enforcement.

At some point, the crypto community may face pressure to fill this gap. When that day comes, the industry will have to do more than complain. It will also have to take responsibility.

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