Updated 17 Aug, 2021

House Representatives Criticize “Harmful” Crypto Provision

 

House Representatives Criticize-_Harmful_-Crypto-Provision

 

Key Takeaways:

  • House Representatives urge Speaker Nancy Pelosi to consider a revised crypto proposal
  • The House, in recess until Sept 20, could still amend the problematic crypto provision

Looming Opposition in the House to the Crypto Tax Requirement

After the largely controversial cryptocurrency provision, part of the $1tn infrastructure bill, was left unchanged after the US Senate passed the stimulus package, the same is now on its way to land for voting in the US House of Representatives.

Even before the Senate vote took place, there was already strong opposition to the proposed cryptocurrency amendment. The amendment sought to impose harsh reporting requirements on people involved with crypto activity.

The contentious crypto proposal would require not only crypto exchanges to report their gains to the Internal Revenue Service, but also proof of stake miners, validators, and software developers.

The legislation is now awaiting a House vote, which would happen near the end of September as the House of Representatives is in recess until Sept 20. As there is still time to amend the proposal, several members of the House have expressed their concerns regarding the crypto tax.

Key Members of the House Urge Nancy Pelosi to Amend the Crypto Legislation

Congresswoman Anna Eshoo said she is working “to fix potentially harmful language on cryptocurrency in bipartisan infrastructure bill.”

In a letter to House Speaker Nancy Pelosi, Ms. Eshoo criticized the tax reporting requirements. She said that the legislation uses “a broad definition of ‘broker’ that could encompass miners, validators, and developers of wallets who are unable to comply with reporting requirements.”

Senator Ted Cruz said that the infrastructure bill “has in it a portion that is designed to obliterate crypto. That would be a tragic mistake.” Senator Patrick Toomey called the crypto provision “unworkable”. On the other hand, others have warned that if the legislation is adopted, it would drive innovation and talent overseas.

The group of House Representatives that opposed the troubling crypto provision has offered a solution. Ms. Eshoo writes in the letter to House Speaker Nancy Pelosi:

“A bipartisan group of Senators offered an amendment to this effect that Secretary of Treasury Janet Yellen supported. However, the amendment was not included due to procedural concerns rather than substantive ones.” Ms. Eshoo suggested that the House should vote on the compromise crypto amendment that has essentially reconciled two competing crypto provisions.

The revised crypto proposal that got the support of Treasury Secretary Janet Yellen could not pass in the Senate as it needed a unanimous consent agreement but a single Senator objected.

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