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Key points to remember
- The Senate is debating a massive infrastructure bill covering crypto-related provisions.
- The White House has backed an amendment to the bill that threatens DeFi and Proof-of-Stake validators.
- The final vote on the amendment is scheduled for Saturday.
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The White House weighed in on ongoing debates over the infrastructure bill.
White House backs controversial bill amendment
The Biden administration has backed an amendment to the infrastructure bill that could impose strict tax reporting rules on DeFi developers and proof-of-stake validators.
Senators Rob Portman and Mark Warner submitted a draft Thursday in response to an earlier amendment to the bill’s cryptocurrency provision. The new draft excludes only Proof-of-Work miners from the provision defining brokers, leaving room for crypto developers and Proof-of-Stake validators to be labeled as such. If passed, that would mean DeFi developers and Proof-of-Stake validators in the United States would have to adhere to strict tax reporting rules.
The White House officially supported the amendment in a statement Thursday. A note released by White House Deputy Press Secretary Andrew Bates read:
“The administration believes this provision will strengthen tax compliance in this emerging area of finance and ensure that high-income taxpayers contribute what they owe under the law. We are grateful to President Wyden for his leadership in pushing the Senate to address this issue, but we believe that the alternative amendment proposed by Senators Warner, Portman and Sinema strikes the right balance and takes an important step forward in promoting tax compliance. “
The Senate is currently debating a $ 1,000 billion bipartisan infrastructure bill for various projects that stimulate economic growth. He must raise $ 550 billion, including $ 28 billion to be secured through strict taxation of cryptocurrencies.
The Senate has included new provisions to broaden the definition of “broker” in the Tax Code. The initial draft of the bill proposed the following definition:
“Anyone who (for a fee) regularly provides a service or application (even if not a custodian) to facilitate transfers of digital assets, including any decentralized exchange or peer-to-peer marketplace. “
The proposal sparked debate across the cryptocurrency industry, as the definition would apply to almost all users of the technology, including miners, validators, developers, and non-custodial wallets. . Coin Center and other advocacy groups then persuaded the Senate to change the definition to focus on those providing a service on behalf of someone else.
Still, many crypto advocates have argued that the new definition is too vague. The Blockchain Association has published a Tweeter indicating that the language raised “fundamental concerns” about the definitions of the provision.
In response to the debates surrounding the definition, Senators Ron Wyden, Pat Toomey and Cynthia Lummis offers a more crypto-friendly amendment on Wednesday, suggesting a definition that would exclude minors, validators, protocol developers and portfolio creators.
The next day, Portman and Warner offers their own rival amendment that only excludes proof of work minors and wallet creators from the provision. Many crypto enthusiasts have pointed out that this provision could mean that validators on proof-of-stake chains like Binance Smart Chain, Cardano, and Ethereum 2.0, and developers of DeFi protocols would be required to meet strict reporting requirements. fiscal.
The White House statement left many in the industry in the dark. Few expected the Biden administration to contribute on the matter, and it could increase the likelihood of Portman and Warner’s draft going through the Senate. As some have underlineIt’s especially surprising to see the White House backing provisions that favor the more energy-intensive proof-of-work consensus mechanism over proof-of-stake given Biden’s commitments to tackling climate issues.
The final vote on the amendments is expected to take place on Saturday, leaving the crypto industry a day to pressure the Senate to approve the Wyden-Toomey-Lummis amendment.
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