White House Backs Strict Crypto Regulation Ahead of Key Vote
- The Biden administration has formally backed a controversial crypto tax amendment
- Crypto organizations race to alter the amendment before it lands for voting on Tuesday
Crypto Taxes as a Way to Pay for the $1tn Spending Package
President Joe Biden and the White House administration have supported a contentious amendment to the $1tn infrastructure bill that is now circulating in the Senate. The amendment will concern cryptocurrencies, or more precisely, it will introduce strict tax rules on cryptocurrency transactions.
The crypto provision is a bid by Senate lawmakers to cover part of the big-ticket cost of the plan. It is aimed to fix bridges, roads and other physical infrastructure.
The key vote is set for Tuesday. While there is still some time to finalize the amendment, crypto advocates are rallying against the proposal. The proposal, in its original form, requires brokers of digital assets to report on crypto trading gains.
Crypto circles argue the language used in the proposal, which seeks to add $28bn by collecting crypto taxes, is vague and too broad. To try and settle the dispute, several Senators have provided their version of a crypto amendment.
The Portman-Warner amendment, proposed by Senator Warner (D-VA), is looking to exclude from taxes only proof-of-work mining, like Bitcoin. It does not offer exemptions to software developers, proof-of-stake validators, or decentralized crypto exchanges.
The Portman-Warner amendment excludes “(A) validating distributed ledger transactions through proof of work (mining) (B) selling hardware or software the sole function of which is to permit a person to control private keys (used for accessing digital assets on a distributed ledger).”
The White House Backs the Proposed Crypto Tax Reporting Requirements
In a surprise move, the White House formally backed the Portman-Warner amendment saying “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.”
The proposed amendment that was unexpectedly endorsed by the White House was rejected by major cryptocurrency organizations. The Blockchain Association said on Friday the suggested provision presented “an imminent threat to the budding crypto industry here in America.”
“What Congress is considering with this measure is not a new tax on the cryptocurrency industry,” the letter by the crypto organization said. “Instead, it puts new reporting requirements on individual players in the industry who have no way to comply.”
As the crypto community is mobilizing against the Portman amendment, the formal White House backing would make the task more difficult. The final vote on the proposal is expected to happen on Tuesday.