US new bitcoin tax plan may stifle greener blockchain technology

According to foreign media The Verge, the bipartisan infrastructure bill being discussed in the U.S. Senate may reshape the cryptocurrency world as lawmakers debate new tax reporting requirements for various parts of the blockchain system. According to the “Washington Post” report, on Thursday, US Treasury Secretary Janet Yellen directly lobbied lawmakers to retain stricter cryptocurrency taxation provisions in the Infrastructure Act.

Foreign media believe that this is a sign that the White House is committed to incorporating cryptocurrencies into the broader tax filing system, even if the details of the new requirements may disrupt the delicate political balance of infrastructure plans.

From the beginning, the drafters of the bipartisan infrastructure framework hoped to offset the sharp increase in new spending with a new cryptocurrency tax of $28 billion (collected within 10 years). In general, the tax proposal is not controversial-but it is difficult to agree on the details of who will bear the burden of reporting the transaction.

The original text of the bill, published a few days ago, introduced a broad new requirement for cryptocurrency brokers, requiring them to report transactions as part of their tax returns, similar to existing traditional asset trading requirements. However, the original text’s definition of “broker” is vague, and may extend to wallet developers or miners.

Senator Ron Wyden and others proposed an amendment. Ron Wyden (D-OR), Cynthia Ruomis (R-WY) and Pat Toumi (R-PA)’s amendments will specifically exempt miners from any reporting requirements, but the amendment has not been passed . Recently, a group of legislators led by Senator Mark Warner proposed a slightly harsh compromise plan, which gained more support in Congress, but made many cryptocurrency advocates uneasy. In particular, advocates worry that the uneven reporting requirements in the amendment proposed by Warner may lead to a lasting split between different blockchain technologies.

Most cryptocurrencies still rely on “proof-of-work” blockchains like Bitcoin, which requires energy-consuming “mining” to authenticate new entries on the blockchain. But a new blockchain model will allow miners to verify blocks by betting a certain amount of currency (hence the term “proof of stake”), allowing faster and more complex transactions. Proof-of-stake blockchain is still not very popular, but cryptocurrencies such as Zcash are actively considering switching to a new model. Ethereum is launching its own blockchain, called Ethereum 2.0 or ETH2.

The amendment proposed by Warner defines “broker” to include “proof of equity” miners, but not “proof of work” miners, because of the increased complexity and financial flexibility of “proof of equity” mining. But the cryptocurrency community is worried that the additional regulatory burden will keep tokens away from the “proof of stake” system and be stifled before new innovations have a chance to gain a foothold.

Neeraj Agrawal of the Coin Center told The Verge: “The language in the new amendment has written one of many competing technologies into the law. This is the government picking a winner in an otherwise highly competitive field. The worst thing is that this A technology policy of this scale is buried as a last-minute tax clause in a large-scale infrastructure bill that must be passed. This is not the way to formulate policies.”

In view of the strong demand for energy in “Proof of Work” mining, this split is particularly divergent. This has been a long-standing pain point of cryptocurrency. Many people had hoped that the proof-of-stake system could solve this problem. In a tweet on Thursday night, Senator Wyden criticized Warner’s proposed amendment from a climate policy perspective, calling it “a safe haven for the most climate-damaging form of encryption recognized by the government.”

Most Bitcoin groups, including the Coin Center, are now pushing the Wyden Amendment as the least disruptive option, despite lobbying by the White House. “If your elected representatives did not hear your opinion, this will not happen,” Coinbase CEO Brian Armstrong tweeted: “Please contact your senators and ask them to support the amendment.”

US new bitcoin tax plan may stifle greener blockchain technology

US new bitcoin tax plan may stifle greener blockchain technology

 

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/us-new-bitcoin-tax-plan-may-stifle-greener-blockchain-technology/
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