The Biden administration has backed a tax change that seemed to be specifically aimed at the DeFi industry. Tuesday’s vote is likely to be the last one on the proposal.
A surprising move, the Biden Administration endorsed an amendment to a huge legislative measure in the Senate that would impose onerous or impossible tax reporting requirements on a wide swath of the crypto sector.
According to the proposal by Senators Rob Portman (R-Ohio) and Mark Warner (D-Virginia), individuals who work on proof-of-work (PoW) networks, as well as validators and developers of specific crypto wallets, would be exempt from tax reporting requirements.
Opposition to the Portman-Warner Amendment
Senator Lummis, who is against this amendment and has proposed a crypto-friendly version, stated that the vote is now anticipated to occur on Saturday.
The crypto industry was caught off guard by the abrupt turn of events, which had taken place around two hours prior, when the amendment that Senator Ron Wyden (D-OR), Senator Pat Toomey (R-PA), and Representative Cynthia Lummis (R-Wyo) had been preparing was poised to pass.
Despite their anger and desperation over the Portman amendment’s passing, many in the crypto industry stated they would fight the legislation in court or get around it by including proof-of-work (PoW) code in proof-of-stake (PoS) projects.
The broader Senate process is now trying to approve a bipartisan infrastructure package. While the law focuses on things like roads and bridges, it also has an impact on the crypto sector since it stipulates that Congress must provide an explanation for every single one of the projects included in the $550 billion price tag.
Janet Yellen’s Apparent Goal to Kill Crypto
Even while that plan seems to have the backing of the White House, Janet Yellen, who is the head of the U.S. Treasury Department, has apparently opposed it.
The Washington Post reports that on August 5, Yellen voiced her opposition to the proposed change to the bill. In an effort to ensure that cryptocurrency businesses do not need to provide securities transaction data to the government, she contacted Senator Ron Wyden on the proposed amendments.
Senators Wyden, Lummis, and Toomey are among the three lawmakers that drafted the amendment.
This bill, HR 3684, seeks to tighten regulations on companies dealing in cryptocurrencies and to increase reporting requirements for stockbrokers, requiring that transactions valued at more than $10,000 be disclosed to the IRS.
This information suggests that, in addition to accounting for the regular transactions they process, companies in the business of validating distributed ledger transactions, developing digital assets or their corresponding protocols, or dealing with mining software or hardware may be required to perform additional tax reporting.