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Government Bitcoin United States

The Future of Cryptocurrency Is Being Decided in Biden's Infrastructure Bill (vice.com) 110

Two competing amendments to the Senate's infrastructure bill may shape the future of cryptocurrency in the United States as senators fight over who must be subject to new tax reporting requirements. Motherboard reports: One proposal wants to exempt miners, hardware manufacturers, and developers, putting the focus on centralized cryptocurrency exchanges and trading apps. But the Biden administration has thrown its weight behind another amendment that would grant exemption only to those behind so-called proof-of-work cryptocurrencies such as Bitcoin, but not other networks said to be more environmentally friendly because they don't consume as much electricity to validate transactions.

The infrastructure bill, which promises public spending on major projects like new roads and bridge repairs, wouldn't appear to have anything to do with cryptocurrency. But the Congress figured that "crypto brokers" could be squeezed for $28 billion in taxes over a decade to foot part of the bill. The proposal immediately caused a furor, with crypto influencers prompting their followers to call their senators and industry stakeholders applying pressure. The definition of brokers in the original bill -- any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person -- was so broad that it meant pretty much anyone that makes a cryptocurrency tick -- node operators, miners, validators, or services that stake digital assets -- would have to report to the I.R.S. the information on their "customers." Cryptocurrencies such as Bitcoin are designed to be non-custodial and pseudonymous, so that requirement would be nearly impossible to satisfy for much of the industry, Olya Veramchuk, director of tax solutions at blockchain firm Lukka, told Motherboard.

On Wednesday, three senators -- Ron Wyden (D., Ore.), Pat Toomey (R., Pa.), and Cynthia Lummis (R., Wyo.) -- put forward an amendment to narrow the definition of a crypto broker down to those who are custodial and actually hold information on their customers, such as cryptocurrency exchanges like Coinbase or trading apps like Robinhood, granting exemption to everyone else. But an amendment proposed by Senators Rob Portman (R. Oh) and Mark Warner (D., Va) on Thursday, favored by the Biden administration, grants an exemption from the tax reporting obligation to only a segment of the crypto industry, resting on a major technical difference in blockchain design between proof-of-network and proof-of-stake. [...] The vote on rival amendments is expected to take place on Saturday.
A proof-of-work model is when a network, such as Bitcoin and Dogecoin, requires miners to take care of the task of validating transactions using huge amounts of electricity for a reward in the form of newly-minted coins. "Others, like Polkadot and Cardano, require 'staking' (hence, proof-of-stake) -- which is a process of pledging funds to the network and getting semi-randomly called to validate transactions," notes Motherboard. "Validators are rewarded with newly-minted coins."
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The Future of Cryptocurrency Is Being Decided in Biden's Infrastructure Bill

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  • And by squeezed (Score:4, Insightful)

    by rsilvergun ( 571051 ) on Friday August 06, 2021 @08:37PM (#61665801)
    What they mean is they're going to have to actually pay the taxes on the profits of the assets that they're holding. If you guys are going to tell us it's not funny money then congrats you've entered the real world and now you have an asset to be taxed. As an added bonus you're going to be taxed to pay for the enormous cost of the activity you're doing for proof of work and the enormous cost for policing the high risk proof of stake coins. No more externalizing your costs on to me and society in general. I'm tired of paying for you to launder money. I should think a lot of people on slashdt tired of paying externalized costs for cryptocurrency.
    • What they mean is they're going to have to actually pay the taxes on the profits of the assets that they're holding

      How do you have any profits while you hold something? You only have profits (or losses) if you sell.

      Is it fair to tax someone on 1 million dollars worth of Bitcoin today if the value goes to 0 tomorrow before they can get anything for it?

      If you were just trying to say "they have to pay taxes on profits they make selling" - well, everyone pretty much does that already! I've had to pay taxes on

      • Re: (Score:2, Interesting)

        by rsilvergun ( 571051 )
        What on God's green earth makes you think that the cryptocurrency miners just hold on to the currency? If everyone was just holding on to it it wouldn't have any value. It has value because it's regularly exchanged for goods and services. Specifically drugs, money laundering and Ransom payments. But it is very much exchanged for those things and in sufficiently large quantities to attract speculators. But speculators don't hang on either. They search for a greater fool. The essence of speculating is to buy
        • No dumbass, if it were regularly exchanged its value would go down. If what you're saying was correct it would mean the Mona Lisa is worth nothing because it is rarely traded. According to your "tax the value of assets" model, Leonardo Da Vinci would have been forced to immediately sell the Mona Lisa because people wanted it. If he didn't sell it he would have to pay taxes.

          • Do you not know what a currency market is? What a Petro dollar is? I mean I'll admit I'm pretty ignorant on the finer points of economics but I at least know that much. Why would anyone mind currency if they're just going to sit on it? How would they pay for the electricity and the upkeep costs on their mining equipment?
        • by Lordfly ( 590616 )

          The valuation of crypto is entirely due to speculators keeping the price high because there's always one more sucker to unload your bags to. Very few transactions are done with cryptocurrencies for goods or services; it's all just speculation.

        • by bwt ( 68845 )

          It has value because it's regularly exchanged for goods and services. Specifically drugs, money laundering and Ransom payments. But it is very much exchanged for those things and in sufficiently large quantities to attract speculators.

          Contrary to fictional pictures painted by the entertainment industry, very little, percentage-wise, of crypto transactions are for the illegal things you discuss. Yes, it's happened, but it's no worse than cash in this regard. This is a cost of the right that people have to engage in commerce anonymously or psuedo-anonymously, which both crypto and cash honor.

          In fact, the colonial pipeline ransomware recovery, probably ended the use of bitcoin for ransomware, because the government was basically able to rec

      • Is it fair to tax someone on 1 million dollars worth of Bitcoin today if the value goes to 0 tomorrow before they can get anything for it?

        How cute, you expect the tax code to be "fair"?

        The current administration is considering a wealth tax, but "don't worry, it's only for the really wealthy, not you (yet)."

      • by bwt ( 68845 )

        The tax model for crypto is well established and not in dispute... if you buy and sell a coin, you pay capital gains in the standard way. If you earn coin you did not previously have (eg staking reward, liquidity pool reward, mining, autofarming interest, gambling profit, etc...) then it is ordinary income. You always prefer capital gains, since it only taxes the gain, whereas income taxes the full amount.

        The bill establishes reporting requirements to the IRS for "brokers". The whole debate is over what con

    • It’s nearly impossible to evade profits right now. Banks are required to report large deposits to the IRS. The best workaround I can come up with is buying merchandise with bitcoin and then sell it locally for cash. Although at that point you’re running a permanent flea market.

    • by backslashdot ( 95548 ) on Friday August 06, 2021 @09:25PM (#61665901)

      Why should someone pay money because something they hold is wanted by others? Let me dumb down the issue to you. If I and someone else wants your house for $100 million, should you be forced to pay $50 million in taxes, not because you sold it .. but just because some people say they would pay $100 million for your house. If you don't pay the tax, you'll be forced to sell the home. Now imagine instead of a home it's your wife.

      • Re: (Score:2, Insightful)

        by rsilvergun ( 571051 )
        Why do I pay property taxes on my home? It's called a wealth tax. For some reason we primarily apply them to the working class, and let the millionaires and billionaires off the hook.
        • by Whibla ( 210729 )

          Why do I pay property taxes on my home?

          I guess the trite answer to that question is: because otherwise you'd be breaking the law, and suffer the penalties for doing so.

          The more complex answer, which I can't answer for you, but can for myself is: to cover the costs of maintaining and perhaps improving your local community, including such things as: waste collection and disposal; local policing; road maintenance; maintenance of parks and other public areas; schools; and local government salaries.

          Sure, some of these might not apply in your particul

    • We don't (yet) have a wealth tax, what they apparently want to do is tax the clearing houses and maybe the crypto wallet providers, these are who I think are 'crypto brokers'.

      • At least in North America. We have property taxes, which are wealth taxes
        • by ShanghaiBill ( 739463 ) on Saturday August 07, 2021 @02:17AM (#61666295)

          At least in North America. We have property taxes, which are wealth taxes

          The average American has 30% of their wealth in their home.

          The average billionaire has 1% of their wealth in their home.

          Property taxes are regressive.

          • Furthermore, since most fund their schools from a bulk of that property tax, you are punishing children of areas who didn't win the genetic lottery of being born to parents living in a well funded district... Parents who were able to zone out lower income people who bring down their property values. (not necessarily poor, in my area the locals stop lower middle-income developments all the time... leaving them essentially to apartments or a few houses near trains or highways. We have no new low-income housin

        • Property taxes mostly exist so if you fall on very hard times, you’re forced to sell your home. We collectively don’t like the idea of poor people owning properly, because who’ll keep the rent-seekers in business?

          Some places do have a “homestead exemption”, but here in Florida it has not kept up with property values, effectively making even terribly dilapidated homes in bad neighborhoods still subject to what is essentially a “wealth tax”.

          • Property taxes mostly exist so if you fall on very hard times, youâ(TM)re forced to sell your home.

            What an exceedingly ignorant statement.

            Property taxes are to fund schools, police/Fire/EMT, roads, bridges, tunnels, sewers, parks, etc.

            We collectively donâ(TM)t like the idea of poor people owning properly, because whoâ(TM)ll keep the rent-seekers in business?

            Please define exactly who "We" is - I have no problem with poor people owning property, and I don't know anyone else that does either.

            Some places do have a âoehomestead exemptionâ, but here in Florida it has not kept up with property values, effectively making even terribly dilapidated homes in bad neighborhoods still subject to what is essentially a âoewealth taxâ.

            In Florida the valuation of a property (hone, condo, etc) is adjusted after it is sold - a person on a fixed income and buys a $100,000 home 15 years ago is paying current tax rates today on a valuation based on the purchase price yeasts ago,

            • Property taxes are to fund schools, police/Fire/EMT, roads, bridges, tunnels, sewers, parks, etc.

              Explaining what they’re used for still doesn’t explain why the taxes simply couldn’t be levied in some other, more progressive method.

              The main reason they exist isn’t to raise money, it’s to give the government a means to seize and place properly back onto the market, in the event the owner becomes insolvent.

              Please define exactly who "We" is - I have no problem with poor people owning property, and I don't know anyone else that does either.

              Someone who can’t afford their property taxes is also unlikely to afford the upkeep on a home. Dilapidated neighboring properties bring down your property values.

              Fur

        • by bwt ( 68845 )

          Property taxes are state taxes, not federal. The tax power in the 16th amendment gives congress the power is to collect taxes "on income", not wealth.

    • I'm also tired of the carbon emissions that result from mining. If you're mining or buying BTC you should 100% be paying a hefty carbon tax.
    • Look, it's either a currency, in which case you tax it in crypto (i.e. the currency). Or it's an asset, in which case you tax it when you sell it for the actual currency (like dollars). It's as simple as that.

    • by bwt ( 68845 )

      What they mean is they're going to have to actually pay the taxes on the profits of the assets that they're holding. If you guys are going to tell us it's not funny money then congrats you've entered the real world and now you have an asset to be taxed. As an added bonus you're going to be taxed to pay for the enormous cost of the activity you're doing for proof of work and the enormous cost for policing the high risk proof of stake coins. No more externalizing your costs on to me and society in general. I'm tired of paying for you to launder money. I should think a lot of people on slashdot tired of paying externalized costs for cryptocurrency.

      The debate is not over what taxes are owed, it's over who has to report transactions to the IRS. In most of the finance industry, institutions report $10k transactions in or out to cash. That'd be a fine model here and it would mean companies like Coinbase or Robinhood would have a reporting burden. The horrific Portman-Warner amendment basically requires any process that changes coins to report to the IRS, even if they don't touch US dollars, and even if they don't have KYC information, which basically mak

  • My support (Score:2, Insightful)

    by Anonymous Coward

    My vote goes to whoever supports an amendment limiting the numbers of cryptocurrency stories allowed on Slashdot. I know, first amendment or whatever but I think we can make an exception in this case - the constitution isn't a suicide pact.

    • Are we currently at four or five simultaneous stories about Apple scanning your iPhotos for child porn?

      The problem is the editors are trigger-happy when it comes to certain story topics - they publish anything that comes along about Apple, Amazon, MS, Tesla and a few other 'hot' topics.

      • The problem is the editors are trigger-happy when it comes to certain story topics

        The popular topics can change. We used to have several stories per week about SJWs, brogrammers, and tech company unionization. Thankfully, those are rarer now.

  • - Naval Ravikant. Cryptocurrency is the government's public enemy #1.
  • The argument is between people who want to exempt software developers and related crypto stuff, and the people who wrote the language in the bill who say, "You don't have to exempt them because it already doesn't apply to them." Neither "side" is trying to make this apply to software or crypto.

    Clickbait of most moronic variety.

    Eventually Sen. Wyden will prevail, because his staff has more experience paying attention to the legal language than these R's who fill their staff with sycophants. In the end, "nuh

    • How long will "R's" get to read the 2,000+ page infrastructure bill?

      • How long before the blame somebody else for why they didn't read it, is that what you asked? They helped write it, if they need extra time to read it, that's their own problem.

        • Dems wrote the bill, Dems set the timetable, decide when it is voted on. That a dozen republicans agreed to high-level ratios of funding and spending for the bill doesn't make them responsible for the verbiage within.

          The bill has been voted on without an actual bill to vote on, just a placeholder.

          That stack of paper Elizabeth Warren flipped around her desk looked to be less than 700 pages, fully one-third the length of the proposed infrastructure bill at 2,700 pages and growing.

          How long should it take for a

          • You're such a moron. The negotiations have been all over the news for months. You didn't even know that the negotiations involve the staff from the different Senators writing different parts? Why would you succeed in discussing it with me? In this case, it has already been in the news about the response from the Senator whose staff wrote that provision, so you're just a complete moron.

            Reality doesn't become whatever you imagine. This was a Republican-authored provision, but their position is, "no, it doesn'

      • We all learned that "D's" are content to pass a bill, so we can find out what's in it! [youtube.com]

      • How long will "R's" get to read the 2,000+ page infrastructure bill?

        What, you don't think turnabout is fair play [youtube.com]? Let's be honest, it's just a sign that our government is dysfunctional regardless of which side is currently in power.

    • Eventually Sen. Wyden will prevail, because his staff has more experience paying attention to the legal language than these R's who fill their staff with sycophants.

      That is really optimistic, but I hope you are right.

  • by fred911 ( 83970 ) on Friday August 06, 2021 @09:11PM (#61665871) Journal

    Put the cat back in the bag? It worked with BitTorrent and the dark web. Makes sense to me!

  • by kenh ( 9056 ) on Friday August 06, 2021 @09:23PM (#61665891) Homepage Journal

    The infrastructure bill, which promises public spending on major projects like new roads and bridge repairs, wouldn't appear to have anything to do with cryptocurrency. But the Congress figured that "crypto brokers" could be squeezed for $28 billion in taxes over a decade to foot part of the bill.

    Got that, you can't tell me what any cryptocurrency will be worth in ten days, but the administration is comfortable to imagine it can 'squeeze' $28 Billion in new taxes out of "crypto brokers". This just points out how tenuous these ten-year 'projected income' estimates are.

    In other news, the CBO scored the 'fully paid-for' $1.2 Trillion dollar infrastructure bill isn't, it will add nearly $300 Billion to the federal debt - the administration says they're confident they can make that up with hand-wavy 'efficiencies'.

    • by bwt ( 68845 )

      Crypto is highly volitile in the short term. In the long term, it's actually much more predictable as the short term volatility averages out. This is symptomatic of an asset that hasn't scaled to it potential. Bitcoin is actually less volatile today than it used to be, and is roughly equivalent to Amazon's stock in this regard, although it outperforms it pretty reliably.

  • >"The infrastructure bill, which promises public spending on major projects like new roads and bridge repairs, wouldn't appear to have anything to do with cryptocurrency."

    That's because it doesn't have anything to do with infrastructure. Lots and lots of things in the so-called "infrastructure" bill have nothing to do with infrastructure. It is wrong, and yet it is typical politics. Less than 7% of the money in the "infrastructure" bill goes to roads, bridges, waterways, ports, and airports. If you w

  • who are so irrational that most of them believe in a sky fairy God and half don't believe in global warming, try to regulate shit that most of them don't have a hope in hell of comprehending.
  • Sensible countries don't allow Omnibus bills like this. A piece of legislation should address a single topic. Otherwise, you get crappy amendments (and lots of pork), because no one really knows what is in the thing. Or there's pressure to accept the crap, because other parts of the bill are sooo important.
  • 120 years ago...

    Senator: What good is electricity in the home?

    "Senator, in 20 years, you'll be taxing it."

    Sigh

  • The USSA is just a contry in the world and the world is bigger than just the USSA.
    The practice of putting all kinds of stuff in a 'bill' labelled as intended for X is not good government practice and smells of tit-for-tat deals.
    Due to the USSA's abysmal montary policy, which is in it's final stages, Bitcoin came to be.
    One cannot ban Bitcoin. (see Nigeria)
    Simply wait for hyperbitcoinization and enjoy.
    Shitcoins are to be avoided because they are the cause of this 'cryptocurrency' thing in this `bill`.
    Wh
  • They'll drown it in the tub now.

  • I just created a couple of NFT's to represent the roads and bridges. Problem fixed.

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