Elon Musk joins tech companies and politicians in attack on crypto tax

• Senator Ted Cruz and Tesla CEO Elon Musk criticized a crypto tax in the Senate infrastructure bill.
• Elon Musk called the legislation rushed, while Cruz said it was dangerous.
• The planned changes would be a “staggering loss,” a spokesperson for Andreessen Horowitz told Insider.

As a bipartisan Senate moved towards a vote on President Joe Biden’s infrastructure package, a chorus of leaders from Silicon Valley and Washington raised concerns over a provision that would add new crypto taxes .

“The infrastructure deal contains DANGEROUS provisions that would devastate crypto and blockchain innovation,” said Senator Ted Cruz noted On Saturday.

Tesla CEO Elon Musk called the legislation “hasty”, saying now is not the time for lawmakers “to pick winners or losers in technology.”

A bipartisan Senate bill last week included new tax rules for trading companies and crypto brokers, a move that is expected to generate around $ 28 billion in new tax revenue over a decade. The White House said the revenues would help fund President Joe Biden’s infrastructure program.

Critics jumped at the idea. They said the tax rules would apply to a larger-than-expected group of crypto companies – some of which would not be able to meet reporting requirements.

Midweek, three lawmakers – Senators Ron Wyden, Cynthia Lummis and Pat Toomey – introduced an amendment they said would better define the word “broker.”

In a statement, Lummis said: “The digital asset and financial technology space is incredibly complicated, and we have spent long hours working in the Senate, with industry stakeholders and with the administration to find a way to effectively integrate digital assets into our tax system. code without harming technology or stifling innovation. “

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Another amendment was proposed by Senators Mark Warner, Krysten Sinema and Rob Portman. Biden’s White House has said it supports this alternative amendment, which would exclude a smaller group of crypto investors from the new tax rules.

“But we believe 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 White House press secretary said on Friday. , Jen Psaki, at a press briefing.

Companies interested in crypto backed down, saying the changes did not go far enough to protect an emerging industry.

“If the last minute infrastructure bill amendment introduced by Senator Warner passes, it will be a mind-boggling loss for America and our ability to remain the epicenter of innovation in the world,” he said. venture capital firm spokesman Andreessen Horowitz said via email.

Toomey noted of the Alternative Amendment: “While I appreciate that my colleagues and the White House acknowledged that their original crypto tax had flaws, the Warner-Portman Amendment chooses winners and losers based on the type of technology used. It’s horrible for innovation. “

“As we’ve been saying for years, the government shouldn’t pick winners and losers in crypto (or any other technology for that matter),” said Stuart Alderoty, general counsel at Ripple, a crypto firm. Twitter.

Jack Dorsey, CEO of Twitter and Square noted the new reporting rules would push innovation out of the United States.

“If we can’t remove the entire provision so that we can have proper hearings and deliberations, let’s simplify the definition of broker to what really matters: where digital assets are exchanged for fiat currency,” said Dorsey said. “Broker = Fiat-to-Crypto exchange.”

The bill, as originally drafted, “would stifle the next 20 years of innovation” from U.S. crypto companies, Anne Fauvre, COO of Oasis Labs, said by email.

“Regulation should be seen as a way to create safeguards around industries. What this bill does, however, is completely destroy one in its infancy – and in so doing, risks killing years of innovation and value creation companies based in the United States, ”said Fauvre. noted.