Category: News

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Crypto Tax Change Proposed By Biden Administration; The Fed Speaks on Digital Assets

Crypto taxes

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taxes – commodity vs security

The Biden Administration is planning on closing a tax loophole it perceives with cryptocurrencies and raising $24 billion according to The Wall Street Journal. “Currently… [crypto transaction sales] aren’t subject to the same so-called wash-sale rules that apply to stocks and bonds. That means people can sell their underwater crypto investments, take a tax-deductible loss and buy right back into the same investment.” Read more.

Tip: This potential taxation change all goes back to the “securities versus commodity” discussion and could be seen as a backdoor to regulating the digital assets industry by defining what is a commodity and what is a security.

taxes – bitcoin mining

A new tax embedded in the Biden Administration’s 2023 budget proposal wants to extract revenue from Bitcoin miners. “The U.S. Treasury Department has proposed a 30% excise tax on the cost of powering crypto mining facilities. (…) The tax would be phased in over the next three years, increasing 10% each year,” writes CoinDesk. Read more.

Gensler speaks

In an op-ed in The Hill, Securities Exchange Commission (SEC) Chair Gary Gensler returns to the media again with a defense of his position on cryptocurrencies and their need to be regulated (“come in and register, or else”).  Responding to critics, Chair Gensler writes, “I find the talking point that there’s a lack of clarity in the securities laws unpersuasive. Some crypto companies might message that the laws are unclear rather than admitting that their platforms don’t have sufficient investor protection.” Read more.

Tip: Gensler’s tempo of crypto-related communications remains at a high intensity. Continue reading “Crypto Tax Change Proposed By Biden Administration; The Fed Speaks on Digital Assets”

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Senator Ted Cruz Wants A Seat At The Blockchain Legislation Table

Senator Ted Cruz

On Wednesday, Senator Ted Cruz (R, TX) re-introduced his efforts which began way back in 2021 to remove egregious taxation requirements of the  Infrastructure Investment and Jobs Act of 2021 on crypto companies.

At the time, Cruz’s press release noted today’s recurring concerns about the potential for innovation moving overseas: “Let’s not be the number one economic developer for the Communist Party of China by sending cryptocurrencies overseas.”

Cruz’s 2023 version, which has been referred to Senate Finance, is known in Senate records as S.695 (see it) or “A bill to repeal the provisions of the Infrastructure Investment and Jobs Act that impose new information reporting requirements with respect to digital asset transfers.” No co-sponsors are currently listed.  The bill is here (PDF).

Cruz has been signaling his interest lately about wanting a seat at the table of blockchain legislation. (Read the Houston Chronicle: “Ted Cruz is one of crypto’s true believers, even as calls for regulation grow.”) Continue reading “Senator Ted Cruz Wants A Seat At The Blockchain Legislation Table”

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Digital Assets Subcommittee Hits The Ground Running Today; House Ag Convenes, Too

French Hill

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today – digital assets subcommittee

All eyes will be on Digital Assets, Financial Technology and Inclusion Subcommittee Chair French Hill (R, AR) today as he hosts his committee’s first hearing titled “Coincidence or Coordinated? The Administration’s Attack on the Digital Asset Ecosystem.” See the hearing’s event page on House Financial Services website – starts at 2 p.m. ET.

Five current digital asset bills are listed for review such as HFS Chair Patrick McHenry (R, NC) and Rep. Ritchie Torres (D, NY) “Keep Innovation in America Act” and discussion draft’s of new, 118th Congress bills from House Minority Whip Rep. Tom Emmer’s (R, MN) and Rep. Warren Davidson (R, OH).

All of today’s prepared remarks are available from the hearing’s five witnesses including:

    • Mr. Mike Belshe, CEO and Co-Founder, BitGo (remarks (PDF))
    • Ms. Tonya Evans, Professor, Penn State Dickinson Law (remarks)
    • Mr. Jonathan Gould, Partner, Jones Day (remarks)
    • Mr. Paul Grewal, Chief Legal Officer, Coinbase (remarks)
    • Mr. Lee Reiners, Policy Director, Duke University (remarks)

Snippet from the testimony: Law professor Tonya Evans makes numerous suggestions on the way forward for digital assets regulation including: “Request the SEC to appear before Congressional oversight committees to explain how its aggressive piecemeal approach to regulation of crypto assets comports with efficient and effective regulation and in line with its legislative mandate to protect investors, to maintain fair, orderly, and efficient markets, and to facilitate capital formation.” Continue reading “Digital Assets Subcommittee Hits The Ground Running Today; House Ag Convenes, Too”

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Bipartisan Crypto Action Seen With New IRS Reporting Fix; Grayscale And SEC Argue

McHenry and Torres

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bipartisan crypto bill – house

A new bipartisan House bill announced yesterday will try to push through changes to egregious crypto broker definitions attached to the Infrastructure Investment and Jobs Act in 2021. The way it was written at the time, miners, stakers, hardware and software wallets as well as software developers would be on the hook for providing tax reporting documents to the IRS.

House Financial Services Chair Rep. Patrick McHenry (R, NC) and HFS committee member Rep. Ritchie Torres (D, NY) are co-sponsoring the new bill titled “Keep Innovation in America Act” and according to a quote from Chair McHenry, it “will fix the poorly constructed digital asset reporting requirements included in the Infrastructure Investment and Jobs Act.”

Co-sponsors are bipartisan, too: Reps. Warren Davidson (R, OH), Ro Khanna (D, CA), Darren Soto (D, FL.), Eric Swalwell (D, CA), House Majority Whip Tom Emmer (R, MN), Rep. French Hill (R, AR) and Rep. David Schweikert (R, AZ). Read more from Punchbowl News.

This is one of those “low-hanging fruit” bills/changes that could get crypto legislation momentum going – it’s generally perceived as small and hard to argue with. (Read what a staffer said last August about this change.) It may also help re-ignite bipartisan crypto interest which has sagged since the FTX collapse in November.

Tip: With the bipartisan support, seeds of the still-unannounced Congressional Blockchain Caucus for the 118th Congress may be appearing. Everyone attaching their name to this bill – except Rep. French Hill – was part of the caucus in the last Congress.
Continue reading “Bipartisan Crypto Action Seen With New IRS Reporting Fix; Grayscale And SEC Argue”

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Senate Takes On Crypto Mining; Rep. Waters Says It’s Time For Legislation

Senator Ed Markey

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Senate mining hearing

Today’s hearing on crypto mining will take place under the auspices of the Environment and Public Works’ Subcommittee on Clean Air, Climate and Nuclear Safety led by Chair Sen. Ed Markey (D, MA). The Senate hearing is in support of Markey’s newly-reintroduced legislation, the “Crypto-Asset Environmental Transparency Act of 2023.”

Politico reports that the legislation would require the “EPA to investigate the [crypto] industry’s environmental impacts” among other elements of the bill. Read more. Rep. Jared Huffman (D, CA) is leading the legislative charge in the House. See the witnesses for today’s hearing here which starts at 2:30 p.m. ET.

Democrat urges legislation

In an interview with CoinTelegraph, Ranking Member of the House Financial Services Committee, Rep. Maxine Waters (D, CA), states her interest in getting crypto legislation done in the 118th Congress. She says, “The world is moving on crypto: different countries, different things we still have to think about… I do believe that […] it has to be a priority of ours.” Read more. Waters adds that she’s “still optimistic” on stablecoin legislation, too.

Tip: Waters is only the second Democrat in Congress – after Senator Kirsten Gillibrand (D, NY) – to say something “pro-crypto-legislation” this year. Continue reading “Senate Takes On Crypto Mining; Rep. Waters Says It’s Time For Legislation”

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Circle Responds To White House With Stablecoin Treatise; Busy Week In DC

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the stablecoin syllabus

Request: Amidst the anti-digital assets missives emanating from the White House in late January (such as The Administration’s Roadmap to Mitigate Cryptocurrencies’ Risks), The White House Office of Science and Technology Policy (WHOSTP) put out a request for help with a “National Digital Assets R&D Agenda.”

Response: And, despite the WHOSTP glass-half-empty tweet announcing the initiative (digital assets are risky, but a CBDC sounds cool), Circle, who issues and maintains the USDC stablecoin, took the glass-half-full approach with its response.

Snippet: “Faster, Cheaper Payments with Programmable Money: Current financial architectures rely on often slow and expensive platforms — that necessitate the involvement of multiple intermediaries, parallel messaging through systems like SWIFT…” If you’re teaching a course in private stablecoins, this could be your syllabus – it integrates information from across the globe beginning with U.S. Treasury’s “The Future of Money and Payments” a key governmental response to President Biden’s Executive Order a year ago.

Tips:

what’s the Chair really like?

Capitol Account talks to former Republican Commodity Futures Trading Commission (CFTC) commissioner Jill Sommers. She provides her opinion on what it was like working with former CFTC Chair and current SEC Chair Gary Gensler, a Democrat: “If you talk to anybody who’s a career employee at the SEC, they’ve probably never in their career seen anyone like him. It’s our understanding that a lot of the proposals [Gensler is putting out] are not even run through the staff and the divisions that typically would be writing those proposals. It’s all out of his office. That is not surprising.” Read more from Capitol Account. Continue reading “Circle Responds To White House With Stablecoin Treatise; Busy Week In DC”

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Rep. French Hill Discusses Digital Assets Legislation Prospects at Milken Institute

Rep. French Hill (R, AR)

At last week’s “Future of Digital Assets” conference produced by the Milken Institute, Rep. French Hill (R, AR), chair of the House Financial Services’ Digital Assets, Financial Technology and Inclusion Subcommittee, spoke at length regarding digital assets legislation prospects in the 118th Congress.

Nicole Valentine, FinTech Director at Milken Institute moderated the discussion.

(Transcript edited for clarity)

On key priorities for the House Digital Assets Subcommittee…

REP. FRENCH HILL: The Digital Assets Subcommittee is a priority for the House Republicans and the House Financial Services Committee because back in 2019, we had two task forces: a task force on artificial intelligence and we had a task force on FinTech, financial technology. Those were bipartisan. It was agreed to and set up by then-Chairwoman Rep.Maxine Waters (D, CA) and then-Ranking Member Rep. Patrick McHenry (R, NC).

And digital assets and financial technology have been a priority for the committee for many years to help solve many of the challenges that the existing financial structure has and lay a framework for innovation for the future. And so it was a “natural” that when Patrick [McHenry] became the chairman of the committee that he would want to have a subcommittee on digital assets. That’s the background – it has the full jurisdictional aspects of all things FinTech, inclusion and the broader picture of digital assets.

In the House and in the Senate, you don’t have clean jurisdiction in some of these key areas. The House Agriculture committee and the Senate Agriculture Committee play a role here as well because under market regulation conditions they might be involved in the futures market or certain aspects of the currency oversight of an exchange.

Our goal is to create a regulatory framework for digital assets. And there’s no doubt in my mind that this country needs that – we’ve seen that through the willy-nilly formation, so far, with no guidance – just pure innovation out there. We’ve seen it in the malfeasance in the industry that we witnessed last year culminating in the collapse of FTX. And we see it in the competition across the globe where other jurisdictions are establishing a legal framework and regulatory framework for digital assets, whether it’s in Europe or Asia. And so that is a critical element to take into account.

And finally, the United States has been at the forefront of financial innovation in the capital markets for certainly the 20th century and into the 21st century. We want to see that continue in a digital format. This is a big agenda for this subcommittee and I look forward to leading it as its initial pioneering chairman, and it’s gonna be a fun ride this year. Continue reading “Rep. French Hill Discusses Digital Assets Legislation Prospects at Milken Institute”

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Digital Assets Hearings Begin Next Week In House; Congress Sending Letters

Hearings

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hearing – digital assets

House Financial Services (HFS) Chair Patrick McHenry (R, NC) has opened the HFS subcommittee floodgates on 118th Congress hearings beginning next week with topics championed by Republicans. See them.

The first hearing of the Digital Assets, Financial Technology and Inclusion Subcommittee with its Chair Rep. French Hill (R, AR) presiding will take place on Thursday, March 9 and echoes the partisan subterfuge theme of a recent letter sent to SEC Chair Gary Gensler, a Democrat, by the HFS Committee regarding the timing of the arrest of FTX founder and CEO Sam Bankman-Fried.

The subcommittee hearing next week -“Coincidence or Coordinated? The Administration’s Attack on the Digital Asset Ecosystem” – appears to take aim at the “Operation Choke Point 2.0” theory that crypto companies are being unlawfully targeted. As of late, Senator Bill Hagerty (R, TN) on February 9 and blockchain technologist and investor Nic Carter on February 10 have suggested that the current “Operation Choke Point” operation is similar to the one which took place in 2013.

The subcommittee’s hearing information will appear here and will include the witness list and live webcast information.

Claiming the dissolution of bipartisan “vibes” when it comes to crypto legislation on the Hill, The New York Times’ DealBook blog says the “committee is having trouble getting companies to agree to participate in the hearing… Even with crypto executives calling for legislative action, few seem eager to engage in a highly political forum.” The subcommittee may want to invite the Fed, FDIC and OCC instead?

hearing – crypto commodity

The House Agriculture Committee may be dipping its toe back in the crypto end of the pool again as the full Committee announced a hearing for March 9 titled, “Rising Risks: Managing Volatility in Global Commodity Derivatives Markets.” See hearing’s event page.

(If you’re keeping score: House Ag is in the morning March 9; HFS Subcommittee on Digital Assets is in the afternoon.) Continue reading “Digital Assets Hearings Begin Next Week In House; Congress Sending Letters”