A tax enforcement plan to pay for US President Joe Biden’s $1trillion bipartisan Infrastructure Bill has caused controversy amongst proponents of cryptocurrencies. One element included in the revenue dragnet is new crypto tax reporting legislation, that has alarmed the sector. The legislation will require large cryptocurrency transfers to be reported to the US Internal Revenue Service (IRS).
Mr Biden’s tax crackdown will then be used to pay for his ambitious spending plans, estimated to cost tens of millions of dollars.
Washington estimates that the cryptocurrency reporting requirements alone could generate an additional $28billion for the US Treasury.
The tax will be attained through, “strengthening of enforcement when it comes to cryptocurrencies”.
Yesterday Republican Senator Ted Cruz, who is a proponent of bitcoin, tweeted: “The Senate is on the verge of passing legislation that would be TERRIBLE for cryptocurrency.
“The infrastructure deal contains DANGEROUS provisions that would devastate crypto and blockchain innovation.
“Supporters of crypto need to make their voices heard.”
Speaking about the cryptocurrency tax element of the new Bill, former chief technology officer of Coinbase Balaji Srinivasan today tweeted: “Make no mistake, this is a backdoor bitcoin ban.
“Compliance is impossible. Their intent is to criminalise full nodes, lightning nodes, and most bitcoin wallets.
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This amendment would be particularly damaging to Ethereum, which is transitioning to the less energy-intensive “proof of stake” consensus mechanism.
Venture capitalist investment firm, Andreessen Horowitz has declared that the Warner amendment would be a “stunning loss for America and our ability to remain the innovation epicentre of the world”.
Another amendment earlier in the week was proposed by US Senators Ron Wyden, Cynthia Lummis, and Pat Toomey.
This was seen as a progressive step for the cryptocurrency ecosystem as it would exclude non-custodial actors like miners and software developers from having to report to the IRS.
The cryptocurrency market remains buoyant today with bitcoin prices at $44,683.73, and ethereum priced at $3,106.81 at of time of writing.