By Alicia Maher
Crypto traders and investors in the US may be forced to resort to illicit and anonymous means just to protect their crypto gains from being taxed. These were the comments of some industry stakeholders in light of the proposed infrastructure bill that seeks to regulate crypto adoption in the US. Despite attracting divergent views and calls for amendment, the US Senate has passed the bill, spelling more doom for investors and crypto enthusiasts.
The Infrastructure bill is bipartisan because at the time it emerged, the House was divided over the provisions contained in the bill. A certain provision, which gave a broader definition to the term ‘broker’ was a source of controversy among US lawmakers. Miners and crypto wallet service providers have been reported to be included in the meaning of ‘broker,’ as per the bill. Only crypto exchanges provide broker services.
Amendment Attempts on Infrastructure Bill Fall Through
Attempts to amend the provision were rebuffed by authorities in the US House. In view of this, the fate of crypto businesses in the country is hanging on a thread, according to certain stakeholders. Another provision in the bill will impose heavy tax burdens on miners, crypto wallet manufacturers and crypto holders. This would push them further in resorting to ‘anonymizing means’ in a bid to escape tax regulations, making it difficult for regulatory bodies to monitor them.
In line with the tax provision, they will also be required to report capital gains on crypto assets. The reactions that trailed the failed amendment attempts on the harsh provisions mostly told of disappointment.
Although the House promised to introduce rules allowing for the proposed amendments before the bill becomes effective, crypto advocates have argued that this is not enough. Part of their argument is that future administrations could interpret the ‘broker’ definition in the bill to include miners and crypto wallets providers, thereby stifling innovations in the space.
However, the secretary of the US Treasury, Janet Yellen may have no problem with these provisions, given that she has always clamored for crypto regulations, owing to the speculative and volatile nature of cryptocurrencies. Citing investors’ protection, secretary Yellen termed Bitcoin an inefficient asset. In July, she issued an ultimatum to head of the US SEC, Gary Gensler, ordering him to come up with regulatory sandboxes on cryptocurrencies.
SEC Commissioner Advocates for Mild Regulations
Conversely, crypto and Bitcoin proponents like Hester Peirce, commissioner of the US SEC, have stressed the need for a mild approach towards crypto regulations. According to her, the space is still nascent and harsh regulations could affect the emergence of innovative technologies.
Serious concerns have emerged on the futile amendment efforts, the majority of which predicted that investors and crypto firms including miners may begin to leave the US to friendlier regions if the bill scales through. The US is treading a dangerous path with the Infrastructure bill if those provisions are not expunged. Meanwhile, applications for US-based crypto ETFs are pending approval.