All Platforms: https://linktr.ee/ljcrypto1118
00:00 - Intro
00:21 - New Tax Code is Impossible To Comply With
05:54 - Two Proposed Amendments
09:11 - The Senator Who Objected
11:47 - Clarification From The Treasury Dept.
13:04 - Treasury Department Trying To Capture Defi???
17:57 - How You Can Help Fight For Crypto
19:22 - Outro
As we all know, there has been a lot of fear about the new crypto tax rules imposed in the infrastructure bill in the USA.
There is a thread of the General Counselor of Compound Finance, Jake Chervinsky, elaborating on the dangers of the crypto tax provisions on the infrastructure bill.
In his first bullet point, he explains that the Tax Code expands the definition of the term “broker” where it’s so broad that it can force anyone in the crypto space to be considered a KYC user.
However, this is nearly impossible because the Defi markets nor validators, miners, and developers could provide the information to be considered that type of customer. I personally am working to become a blockchain developer and to be considered KYC doesn’t make any sense at all because you don’t have to necessarily be invested in the crypto, but someone who just innovated the technology OF that crypto or the blockchain behind that crypto as a whole.
According to Jake Chervinsky, if this Tax Code is taken literally, this can completely ban Defi, mining, staking, and take crypto firms out of business in the USA and destroy blockchain development jobs. This would ultimately take crypto businesses and also investors overseas and away from the USA.
In order to get this passed, it first has to go through the Senate. Luckily, there were senators who proposed amendments to try to rewrite the Tax Code for crypto. One amendment was the Portman-Warner-Sinema Proposed Amendment:
This amendment only excludes PoW miners from being included in the new Tax Code. However, there was no specific quote or written document that shows proof of primary resources.
The other and much more amendment was the the Wyden-Toomey-Lummis Proposed Amendment:
“Our amendment will ensure non-financial intermediaries like miners, network validators and other service providers — many of whom don’t even have the personal-identifying information needed to file a 1099 with the IRS — are not subject to the reporting requirements specified in the bipartisan infrastructure package.”
This is a quote that was said by Toomey, which excludes miners, PoS validators, and miners. Basically, any category of people who absolutely don’t have the documentation to be considered a KYC customer.
It finally came down to the day that the senators would vote on the Tax Code being changed for crypto and everybody voted except for Senator Richard Shelby. He filed an objection and attempted to add his own amendment to increase military spending.
This was a tweet of him explaining why he made the decision to object to the amendments and this is by far one of his most popular tweets with a lot of backlash from the crypto community.
Very recently though, a representative of the Treasury Department has announced that the Tax Code will not come after developers, miners, and wallet providers. This seems to be pretty good news and relieves some of the fear around this bill, that is if they keep their word.
However, Jake Chervinsky has also recently stated that filling in this new Tax Code at the last minute in the infrastructure bill was a part of the Treasury Department’s plan to try and “capture DeFi.” One of his quotes states:
“This is all about DeFi. This is the Treasury Department trying to work out how to get jurisdiction over DeFi and also expand its warrantless surveillance over a peer-to-peer financial system.”
Chervinsky has also stated that he was informed on how the Treasury Department initially opposed exemption of network validators and software developers from the bill.
If all of this is true, I wouldn’t be surprised. Crypto is a major disruption to the traditional financial system that we’ve lived under for centuries.
Even though the crypto amendments didn’t get approved through the senate, the Tax Code still has the chance to get denied through the House Of Representatives. You can go to the Fight for the Future website right now to contact congress to voice out how you feel about the tax provisions imposed on crypto in the infrastructure bill.
This saga has not ended and the crypto community will continue to fight for their rights. This is a fight to save crypto jobs, passions, and financial freedom.
Resources:
https://www.coindesk.com/senate-compromise-infrastructure-bill
https://twitter.com/SenShelby/status/1425142857199980550