Members of Congress lobby Nancy Pelosi and others to amend crypto tax definition

August 13, 2021 Coin Telegraph

Anna Eshoo

Anna Eshoo has urged the House to amend the language in the controversial infrastructure bill.

A Californian congresswoman has written to Speaker Nancy Pelosi expressing concerns about the controversial new mandate for crypto tax reporting.

Anna Eshoo, who represents California's 18th Congressional District, penned a letter to the Democratic party speaker of the United States House of Representatives, Nancy Pelosi, on Aug. 12.

In it, she urged Pelosi to amend the cryptocurrency broker definition in the Senate’s controversial infrastructure bill. Eshoo claims that miners, validators, and developers of wallets would be unable to comply with the crypto tax reporting requirements.

Today I urged Speaker Pelosi to amend the cryptocurrency broker language in the Senate’s infrastructure bill.

The legislation imposes new reporting requirements on miners, validators & developers of wallets who would be unable to comply with these requirements. #DontKillCrypto pic.twitter.com/TSmSL21D5z
— Rep. Anna G. Eshoo (@RepAnnaEshoo) August 12, 2021

Last-minute additions to the bipartisan infrastructure deal saw lawmakers propose expanded cryptocurrency taxation to raise an additional $28 billion in revenue. It will impose additional reporting requirements on any crypto company or organization deemed to be a “broker.”

The disputed bill defines “brokers”, who must report certain transactions to the Internal Revenue Service, as “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”

Eshoo is among numerous U.S. lawmakers such as Senators Pat Toomey, Cynthia Lummis and Ron Wyden, who assert that miners, stakers, validators, software developers and hardware manufacturers should not fall into this broadly termed category. In the letter, she stated:

“In the decentralized system of cryptocurrencies, these individuals and entities do not know who the buyers and sellers are and would be unable to comply with the broker requirements.”

The wording of the bill isn't finalized yet, and the latest text still needs to clear the U.S. House of Representatives, and several House members have already called for changes.

Congressman Tom Emmer, who introduced the Security Clarity Act in mid-July, alongside his co-chairs on the House's bipartisan Blockchain Caucus, circulated a letter on Monday to fellow representatives that urged updates to the language.

“Cryptocurrency tax reporting is important, but it must be done correctly. We must prioritize amending this language to clearly exempt noncustodial blockchain intermediaries and ensure that civil liberties are protected.”

Eshoo is largely in agreement, stating that tax evasion should be addressed, before adding “the House must amend the bill to meet this goal without stifling innovation in a nascent industry by imposing unworkable regulations.”

On Aug. 10, the bill was passed without clarification on crypto or any amendments after a single senator objected to amendments being voted upon.

Coinbase beats earnings estimates as analysts say regulation will ‘stifle’ innovation

August 11, 2021 Coin Telegraph

Bitcoin

COIN exceeded earnings estimates but analysts caution that blanket crypto-sector regulation will “stifle innovation” and possibly cast a shadow on Coinbase's growth.

Coinbase Global (NASDAQ: COIN) rebounded during the early trading hours on Aug.11 after it beat Wall Street forecasts for sales and revenues in the second quarter.

The cost to purchase one COIN share surged 4.7% to $282.34 at the New York opening bell. Later, bids for the COIN rose to as high as $294 before pulling back to its current price at $279.72.

*Coinbase stock daily chart. Source: TradingView*

Strong Q2 earnings for Coinbase

Coinbase Global reported better-than-expected earnings in the second quarter of 2021and posted net revenue of $2.3 billion. That came to be 27% higher from the previous quarter and 1,042% up on a year-over-year basis.

Meanwhile, Coinbase's net income rose from $32 million to $1.6 billion in the same period, surpassing earnings of older and more traditional exchange operators, including the CME Group of Chicago, which earned $510 million and made $1.2 billion in revenue in Q3, and the Intercontinental Exchange, which reported a $1.3 billion in earnings.

The positive Coinbase results appeared as various entities continue to accumulate Bitcoin and the firm reported that its monthly transaction metric climbed to 8.1 million in Q2 from $6.1 million in Q1. Meanwhile, its trading volume rose to $462 billion from $335 billion in the same period.

In excerpts from the earnings call transcript, Coinbase CEO Brian Armstrong is heard discussing plans to expand Coinbase operations in the future.

Armstrong said:

"We're also focusing on international expansion, another form of decentralization, and just listing more and more assets. We want to be the Amazon of assets, list every asset out there in crypto that's legal."

In a letter to shareholders, Coinbase shared plans to explore decentralized finance (DeFi), adding that mainstream customers and institutions would soon be using the technology that cuts out traditional intermediaries from financial services, such as lending and borrowing.

Analysts still express caution

On the flip side, Coinbase warned that declining volatility in the cryptocurrency market that could impact its earnings in the year ahead.

The firm stated that its monthly transacting users (MTU)—retail traders that trade on exchanges at least once a month—surged 44% to 8.8 million at the end of Q2. Nevertheless, the net MTU declined in July and August, prompting Coinbase to lower its annual users estimate from 9 million to 8 million.

Declining trading volumes is another metric concerning analysts and the figure turned out to be weaker in July, mostly due to Bitcoin price slumping below $30,000.

According to Wedbush Securities analyst Moshe Katri, COIN's primary concerns are "mostly related to the regulatory environment."

Katri is likely referring to the US Senate approving a roughly $1 trillion infrastructure bill, a part of which requires digital asset brokers to report capital gains to the Internal Revenue Service. The bill aims to raise $28 billion in a decade by taxing the cryptocurrency sector but it failed to define who it considers "brokers."

Anne Fauvre, COO of data security firm Oasis Labs, said that the bill is too vague, fearing that it might end up covering even entities that are neither brokers nor hold any personal information of their customers.

Fauvre told Cointelegraph, "Regulation should be seen as a way to create guardrails around industries" and "this bill would stifle the next 20 years of innovation in the US as we know it."

Adding to these regulati concerns, Coinbase CFO Alesia Haas told CNBC that U.S. regulators and lawmakers need to know that every cryptocurrency is not a security. Armstrong said that Coinbase is investing in a crypto advocacy group called the "Crypto Council for Innovation" to ensure "sensible regulation" in the US.

COIN's technical outlook is positive

Katri iterated a 'Buy' rating for the Coinbase stock and suggested a rise to $300 in the next 12 months, which is a 3.03% upside estimate.

*Analyst rating consensus for the Coinbase stock. Source: TipRanks*

According to TipRanks, the average analyst consensus for COIN was also a 'Buy' with a $369.25 price target per share by next year.

Unchanged crypto tax bill will be put to a vote on Tuesday

August 9, 2021 Coin Telegraph

Coin Telegraph

Senate talks regarding the controversial crypto provisions to the U.S. infrastructure bill have ended without amendment, suggesting the original bill will be voted on come Tuesday.

The provisions aim to raise $28 billion for infrastructure funding through expanded digital asset taxation, and will impose broad third-party reporting requirements on any crypto firm deemed to comprise a “broker.”

On August 9, general counsel to Compound Finance, Jake Chervinsky, tweeted that the Senate had voted 68 in favor to 29 against ending debate surrounding the provisions, halting discussions until Tuesday’s final vote.

However, Chervinsky emphasized that the Senate could still pass an amendment to the bill by unanimous consent before the final vote.

Senate talks over the controversial cryptocurrency tax provisions to the U.S. infrastructure bill have stalled, with an unamended version of the bill set to be put to a vote on Tuesday.

Sunday night infrastructure bill update:

The Senate has voted 68-29 to end debate. We wanted a vote on the Wyden amendment first, or on a Wyden-Warner compromise, but no luck.

The Senate has to wait until Tuesday to do a final vote. They might still amend the bill before then. https://t.co/VFrmnZqOPQ
— Jake Chervinsky (@jchervinsky) August 9, 2021

The broad language used to define a crypto “broker” in the provision has sent shockwaves across the crypto industry, with analysts inferring that miners, stakers and other network validators, and software developers could be subjected to third-party tax reporting requirements despite failing to possess personal information on their counter-parties.

The crypto sector has thrown support behind an amendment proposed by Senators Pat Toomey, Rob Wyden, and Cynthia Lummis that would limit the definitional scope of crypto “brokers” to exempt miners, validators, and software developers from the provision. However, the majority of lawmakers are backing a competing amendment from Rob Portman, Mark Warner, and Kyrsten Sinema that would only exempt miners, proof-of-stake validators, and wallet providers from the bill.

Also Read: Treasury Secretary reportedly against amending crypto language in infrastructure bill

According to an August 8 Twitter thread from Lummis, both sides are now at an impasse over the 30-hour rule — which allows senators to consider a bill for up to 30 hours before voting on it.

Lummis asserted that while “some senators want to keep focusing on the infrastructure bill for 30 hours to raise awareness about its price tag,” Senate Majority Leader Chuck Schumer “wants to quickly vote in order to focus on other legislation, and won’t allow amendment votes unless that happens.” However, Lummis added:

“If we could vote on amendments I think the digital asset community would be pleased with the outcome.”

If passed by the Senate on Tuesday, the legislation would still need to clear the house before becoming mandated as law, giving further opportunity for the crypto provisions to be revised.

White House Backs Crypto Tax Amendment Endorsing Proof-of-Work in Infrastructure Bill

August 6, 2021 Bitcoin.com

Some US lawmakers want Bitcoin miners to be exempted from proposed crypto taxes

August 3, 2021 Coin Telegraph

Bitcoin mining

Certain members of Congress want assurances that Bitcoin miners and crypto software developers will not be subject to the newly proposed tax rules.

Lawmakers in the United States have called for caution regarding implementing a proposed tax policy that could have significant implications for America’s crypto space.

As previously reported by Cointelegraph, an expanded crypto taxation regime was a last-minute addition to the $1-trillion infrastructure deal currently being debated in Congress. According to the proposed amendments, tighter rules on crypto reporting requirements could provide $28 billion in additional funding for the government.

However, Senator Patrick Toomey is among a group of senators who have warned of the broad language used in the expanded crypto tax policy. According to a Washington Post article, Toomey argued that the bill’s wording could provide legislative backing for a broader crackdown on the U.S. crypto space beyond exchanges and other businesses and target entities like Bitcoin (BTC) miners and software developers.

Senator Toomey is not alone in these assertions, as the overwhelming reaction from industry commentators is that the vagueness of the bill’s wording provides ample opportunity for punitive regulatory policies that could be detrimental to digital innovation in the country.

However, fellow Senator and drafter of the crypto tax policy Rob Portman has downplayed fears that the new rules will affect miners and software developers.

A spokesperson for Senator Portman quoted by the Washington Post stated, “This legislative language does not […] force non-brokers, such as software developers and crypto miners, to comply with IRS reporting obligations.”

Efforts to protect miners from onerous tax reporting requirements come as U.S.-based miners continue to expand their capacity in the wake of the hash rate exodus from China. Marathon Digital reportedly looks to achieve a hashing capacity of 13.3 exahashes per second before the end of Q2 2022 — a figure that is about 12% of the current total hash rate of the Bitcoin network.

US Senator Says Crypto Tax in Infrastructure Bill Is ‘Unworkable,’ Plans to Offer Amendment to Fix It

August 3, 2021 Bitcoin.com

Biden to Step Up Crypto Tax Enforcement to Help Fund $1 Trillion US Infrastructure Plan

July 30, 2021 Bitcoin.com

South Korea Proposes Law Allowing Direct Seizure and Sale of Crypto Assets to Pay Overdue Taxes

July 28, 2021 Bitcoin.com

Existing Indian law could impose 2% levy on crypto bought from offshore exchanges

June 22, 2021 Coin Telegraph

2% levy

Existing law in India could mandate a 2% levy on cryptocurrency purchases from offshore-based exchanges servicing India’s market.

According to local sources, the Indian Government’s 2% “equalisation levy” could be extended to crypto-assets purchased from off-shore exchanges.

According to a June 22 report from Economic Times, analysts are inferring that existing law could require a 2% levy to be added onto the settlement price of crypto bought from overseas-based crypto exchanges operating in India’s market.

The equalisation levy was first introduced by the government in 2016, imposing a 6% tariff on payments for e-commerce supply and services to non-resident companies without a permanent establishment in India.

However, the equalisation levy was updated in mid-2020. Now dubbed the “Google Tax,” the updated legislation imposed a 2% tax on services provided by off-shore e-commerce operators conducting business in India, with tax experts inferring that the tariff may also apply to foreign-based crypto exchanges servicing Indian customers.

“The way the new equalisation levy is worded and defined, it appears that it will also be applicable on cryptocurrency bought from an exchange not based in India,” Girish Vanvari, founder of tax advisory firm Transaction Square, told Economic Times. He added:

“The levy is on the selling price and companies may be required to add this to the cost of the crypto assets.”

Amit Maheshwari, tax partner at tax consulting firm AKM Global, argued it would be difficult for India’s government to impose a 2% levy without first establishing a broader regulatory apparatus addressing crypto assets, stating:

“In the absence of any guidelines on the treatment of crypto assets, there is ambiguity in how these would be treated under the tax laws and FEMA (Foreign Exchange Management Act).”

The regulatory status of crypto assets has long been a contentious issue, with Cointelegraph reporting on June 16 that the Indian government is reviewing whether to introduce a bill banning crypto outright, with some officials arguing digital assets should be classified as an alternate asset class.

The Reserve Bank of India (RBI), appears to have maintained its anti-crypto stance, with RBI Governor Shaktikanta Das stating the central bank has “major concerns” regarding cryptocurrency that it has conveyed to the government.

In March 2020, India’s Supreme Court repealed the RBI’s two-year prohibition on local financial firms providing banking services to businesses operating with crypto assets.

Brazilians Who Held $1,000 in Crypto Last Year Must Report It on Tax Returns by End of May

May 30, 2021 Bitcoin.com

Crypto tax