Bitcoin and cryptocurrencies have soared in recent days even after the U.S. Senate rejected a bipartisan compromise on a crypto tax provision in its $1 trillion infrastructure bill.
The bitcoin price has added almost 20% over the last week, climbing to over not $45,000—its highest since mid-May while smaller cryptocurrencies, including ethereum, dogecoin and uniswap, have climbed even higher (subscribe now to Forbes’ CryptoAsset & Blockchain Advisor and discover crypto blockbusters poised for 1,000% gains).
Ahead of the Senate showdown yesterday, billionaire entrepreneur and investor Mark Cuban warned shutting off the bitcoin and crypto “growth engine” would be like “stopping e-commerce in 1995.”
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“Shutting off this growth engine would be the equivalent of stopping e-commerce in 1995 because people were afraid of credit card fraud,” Cuban told the Washington Post over the weekend. “Or regulating the creation of websites because some people initially thought they were complicated and didn’t understand what they would ever amount to.”
The provision proposes new rules on reporting crypto transactions to the IRS as part of the bill’s fundraising provisions—that could raise as much as $28 billion by encouraging the payment of more taxes. Broadly defined brokers would be required to provide information on bitcoin and crypto transfers, causing chaos for the industry.
Yesterday, after weeks of wrangling, a compromise crypto amendment in the bill was blocked. Introduced by senators Pat Toomey (R-Pa) and Cynthia Lummis (R-Wyo), the amendment sought to clarify language in the bill that would broaden the definition of a “broker” and increase tax requirements on software developers and those that secure blockchains in return for freshly minted tokens, known as miners.
The bill’s crypto provision sent shockwaves through the U.S. cryptocurrency community in recent weeks, with crypto lobbyists scrambling to alter it and crypto investors, industry experts and technologists roundly deriding it.
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“The bill has the potential to swamp cryptocurrency transactions in the country with an invasive dragnet,” Paolo Ardoino, the chief executive at British Virgin Islands-based crypto exchange Bitfinex, said in emailed comments.
Last week, tech investor and former Coinbase chief technology officer, Balaji Srinivasan, branded the latest amendment “a backdoor bitcoin ban,” while crypto lobbyist Jerry Brito, the executive director of the Coin Center think tank, called it “disastrous” and “ridiculous.”
“Forcing reporting rules on Americans who develop software and hardware, who mine and secure the network, or who run nodes to build resilience and efficiencies, is an impossible ask that will only drive development and operation of this critical technology outside the U.S.,” posted Twitter and Square