request for taxes
The deadline for Senate Finance Committee Chair Ron Wyden’s (D, OR) and Ranking Member Mike Crapo’s (R, ID) request for comment on digital assets taxation came and went on Friday.
Back in July, the two Senators set out “to address uncertainties surrounding the tax treatment of digital assets with an open letter seeking input from experts, stakeholders and interested parties.”
And then on August 25, U.S Treasury inserted itself into the digital assets tax discussion with proposed rulemaking that was seen as draconian by some industry participants and House Republicans including Financial Services Committee Chair Patrick McHenry (R, NC). Treasury’s rules will presumably overlap with Senate Finance’s efforts as well as McHenry’s “Keep Innovation In America Act” [H.R.1414].
request for taxes – comments
Among those announcing their submission of comments to the Finance Committee on Friday was the Crypto Council of Innovation (CCI). CCI’s letter does not hesitate to criticize Treasury’s August 25 tax proposal: “The overbroad proposed definitions of ‘broker’ and ‘digital assets’ would include certain decentralized finance (DeFi) protocols, self-hosted wallet products, nonfungible tokens, and also not differentiate between digital assets used as payments and digital assets used as investments.” And then, the industry organization provides a list of recommendations. See the letter.
Consensys counsel Bill Hughes discussed his blockchain company’s submission to Senate Finance on X. Hughes began, “If the U.S. is to remain a a global hub for investment in new and emerging technologies, then it is critical to have a tax regime that provides clear and timely rules, is flexible in its application to new technologies, and informed by stakeholders’ views.” Read the thread.
The Chamber of Digital Commerce responded to the Senate Finance Committee’s solicitation for policy input on the taxation of digital assets – Chamber of Digital Commerce
On Friday, Politico reported that House Majority Whip Tom Emmer (R, MN) will be looking to rein in the Securities and Exchange Commission (SEC) with a “crypto rider” which aims to put “new restrictions on the SEC’s ability to bring crypto enforcement cases as part of an upcoming funding bill for the agency.” Though Democratic support for the rider is expected to be nil, Politico’s Declan Hardy says that Emmer’s goal is to create a bridge to new rules and regulations that Congress will create. Read a bit more.
Video: “The SEC is essentially executing Operation Choke Point 2.0.” (1:05) – Senator Bill Hagerty (R, TN) on FoxBusiness (via X)
G20 crypto declaration
Over the weekend, President Joseph Biden – along with other leaders of the G20 – endorsed a declaration supporting the new Financial Stability Board’ recommendations (as we reported on Friday) on regulation, supervision and oversight of crypto assets.
The Economic Times explains, “The G20 leaders under India’s presidency asked the FSB and standard-setting bodies (SSBs) to promote the effective and timely implementation of these recommendations in a consistent manner globally to avoid regulatory arbitrage.” Read more.
See the page 23 for the crypto component of the declaration here (PDF).
Video: John Schindler, Secretary General, The Financial Stability Board (FSB),
discusses the new IMF-FSB comprehensive framework for cryptos (6:34) – CNBC-TV18 (via X)
courts of regulation – Ripple
Unsurprisingly, the SEC isn’t letting up in its case against cryptocurrency company Ripple. On Friday, the regulator submitted a request to Judge Analisa Torres for an appellate court review of her original summary judgment on July 13, which mostly favored RIpple.
Decrypt reports that the SEC is challenging Torres’ “findings that Ripple’s programmatic and institutional sales of the digital token XRP were not securities offerings requiring registration with the regulator. The judge ruled that only certain institutional sales Ripple made under investment contracts were unregistered securities trades.” Read more.
race for White House
Coinbase CEO Brian Armstrong stated in an interview with Yahoo Finance on Friday that he’s noticed several presidential candidates have come out in favor of crypto which could effect the race for the White House in 2024 .
On candidates other than the incumbent, Democratic President Joseph Biden, Arrmstrong said, “They see it as an opportunity to challenge– the policies of the current administration has had in downstream effects with the regulators. That they view as not in line with what the American people want. And so, I think this could become a hot topic in the presidential race in 2024.” He demurred on endorsing any candidates, but the effect of a Republican administration was not lost on him beginning with changes in the SEC and its Chair Gary Gensler.
Video: Interview with Coinbase CEO Brian Armstrong on international expansion, bitcoin ETF impact, SEC regulation & competition (4:16) – CNBC
Mainnet, a crypto conference taking place from September 20-22 in New York City, will highlight local Members of Congress active in the D.C.’s digital assets legislation conversation. Rep. Ritchie Torres (D, NY) and Sen. Kirsten Gillibrand (D, NY) are both scheduled to appear – exact times are TBD. This is a coup for Mainnet empresario Ryan Selkis, who is also CEO of Messari Capital, the a data and research company and the event’s producer. See Mainnet’s agenda.
Congressional Democrats talking crypto publicly are hard to come by although Gillibrand and Torres are as outspoken as they come. Sen. Gillibrand is co-sponsor of the “Lummis-Gillibrand Responsible Financial Innovation Act” [S.2281]. And Rep. Torres is co-sponsor of Chair McHenry’s “Keep Innovation In America Act” and recently supported passage of the stablecoin and digital asset market structure bills out of the House Financial Services Committee.
Back in the spring, Selkis launched a “pro-crypto public relations and lobbying campaign” called Digital Freedom Alliance (DFA). It’s unclear where DFA stands today. The website for DFA was offline this weekend and the Twitter account hasn’t posted since June.
On Friday, a spokesperson for Messari Capital told blockchain tipsheet there were “no updates” regarding DFA.
new DeFi rules
The International Organisation of Securities Commissions (IOSCO) released a new report that looks at addressing the regulation of decentralized finance (DeFi). A request for comments is due October 19 with a final report targeted for the end of the year. As noted in the footnotes about the report’s authors: “The DeFi Working Group is led by staff from the United States Securities and Exchange Commission…” See the report.
Former Capitol Hill staffer for Sen. Cory Booker (D, NJ), Rashan Colbert, who is now head of policy at crypto platform dydx, commented on X, “IOSCO just took a meaningful shot at bringing DeFi into the regulatory perimeter. I don’t think it’s what we need, but the report is worth studying.”
Colbert links to a tweet thread analysis of IOSCO’s DeFi proposal by the European Crypto Initiative: read the thread here.
still more tips
Opinion: The FIT Act Is the Most Comprehensive Crypto Regulation Ever Voted on by Congress – CoinDesk
“CNBC published a story titled ‘Texas paid bitcoin miner Riot $31.7 million to shut down during heat wave in August’. Unfortunately, this sensational and inaccurate headline has caused confusion, which we would like to dispel” – Riot Platforms
Fists Fly At The Philly Fed Over Stablecoins – Forbes
The Bitcoin ETF Trade Is Increasingly About Bitcoin Itself – The Wall Street Journal
What it’s like in Europe’s popular crypto haven Portugal as the U.S. cracks down – CNBC
Boss of Failed Crypto Exchange Gets 11,000-Year Sentence – Bloomberg
Statement of Commissioner Christy Goldsmith Romero: Arming Crypto Customers with Free Tools to Protect Themselves from Becoming a Victim – CFTC.gov