US Congress may be picking winners and losers with last minute amendment to crypto tax rule


  • Two US Senators proposed a competing amendment to an earlier one submitted to the US infrastructure bill.
  • The new amendment excludes proof-of-work mining and faces intense criticism for supporting increased energy consumption.
  • The White House shared a statement providing safe harbor to the most climate-damaging form of cryptocurrency mining.

President Biden's administration weighed in on the crypto tax rule and supported the compromise amendment that top Republican negotiator Senator Rob Portman proposed. 

White House formally supports rushed amendment to cryptocurrency tax bill

The ongoing battle on a provision in the bipartisan infrastructure bill, which imposes stricter tax rules on crypto transactions, is far from over. Last weekend a group of ten senators released a much-awaited 2,702-page long infrastructure bill. 

The current debate is over a specific provision on crypto tax rules where advocates argue that the language in the legislation states that crypto “brokers” would pay taxes. The definition of “brokers” is broad enough to cover miners, stakers, cryptocurrency exchanges, lending platforms and developers. 

Amendments to the language of the crypto tax rule are circulating that intend to narrow the scope of the term “brokers”. On Wednesday, Senators Ron Wyden, Pat Toomey and Cynthia Lummis introduced an amendment that explicitly excludes validators, software and hardware makers, and protocol developers from the definition. The cryptocurrency community gathered in support of the three Senators; however, a last-minute amendment was proposed by the creators of the original crypto tax provision.

Senator Rob Portman, who drafted the provision, was joined by Senators Mark Warner and Kyrsten Sinema. The trio submitted their rival amendment based on the description of prior revisions; the move has incited fear of a broader definition of "crypto broker". The rushed amendment was subjected to intense criticism from Jerry Brito, executive director at Coin Center, a nonprofit research and advocacy center. 

https://twitter.com/jerrybrito/status/1423429377459736577

Several influencers in the crypto community slam the new amendment. In an interesting turn of events, the White House has come out publicly supporting the Portman-Warner-Sinema trio. 

Deputy press secretary Andrew Bates wrote,

The Administration is pleased with the progress that has yielded a compromise sponsored by Senators Warner, Portman and Sinema to advance the bipartisan infrastructure package and clarify the measure to reduce tax evasion in the cryptocurrency market.

Despite support from the White House, the Portman amendment is being criticized since the definition of “brokers” excludes proof-of-work mining, considered the most harmful to the environment. Charles Hoskinson, CEO of Cardano, slammed the amendment in his recent tweet,

The infrastructure bill has earmarked $21 billion for “environmental remediation,” therefore, excluding the most energy-intensive form of mining raises concerns in the crypto community. The bill was initially viewed as step one of President Joe Biden's Green New Deal to remake the US economy; however, excluding proof-of-work miners provides a government-sanctioned safe harbor for a climate-damaging form of crypto tech. 

Senator Ron Wyden voiced his concerns in a recent tweet

 


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