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Crypto community reacts to Biden’s proposed crypto tax reporting rules

August 27, 2023 Coin Telegraph

Chris Perkins

Many prominent crypto commentators are concerned that this will make crypto firms even more reluctant to do business in the United States.

Several prominent crypto commentators have criticized the new crypto tax reporting rules recently put forth by United States president Joe Biden.

On Aug. 25, in an effort to catch crypto users avoiding taxes, the Internal Revenue Services (IRS) proposed brokers follow new rules for selling and trading digital assets. Brokers would use a new form to make tax filing easier and prevent cheating on taxes.

The Treasury indicated that the proposed rules would make digital asset reporting similar to reporting on other kinds of assets.

However, many in the crypto community believe the stringent rules will push the crypto industry even further away from the U.S.

Messari CEO, Ryan Selkis was among those who responded unfavorably to the news, believing that if Biden secures re-election, the crypto industry will not flourish in the country.

There's no future for crypto in the US if Biden is reelected. I'm sorry.

Move abroad, draft Newsom and hope for the best, or vote GOP where at least we know the top three candidates are less terrible on this issue.

Crypto has always been political. ‍

Have a nice weekend.
— Ryan Selkis (@twobitidiot) August 25, 2023

Likewise, Chris Perkins, president of crypto venture firm CoinFund holds the viewpoint that other countries have surged ahead of the U.S., and these rules will inevitably result in reduced innovation flowing into the country.

Rather than resorting to harsh crackdowns, he believes that simple and detailed rules that will allow safe innovation across the crypto industry is needed.

To clarify, I agree that other jurisdictions have seized the initiative and the U.S. has sadly fallen behind. We need proactive, nuanced policies that encourage and unlock responsible innovation across crypto verticals. Clarity is coming, one way or another. The time to engage…
— Christopher Perkins NYC (@perkinscr97) August 26, 2023

Meanwhile, others remain skeptical that neither the Democrats or the Republicans would adequately champion crypto interests in the U.S.

“I'm not confident that either party would be good for crypto. Though it definitely feels worse now than last presidency,” one user stated, as another pointed that the new rules raise privacy concerns:

“US devotion to income tax means they can NEVER accept private transactions on public ledgers without tax and sanction surveillance.”

On Aug. 25, Cointelegraph reported that Kristin Smith, CEO of the Blockchain Association, held reservations about merging digital asset reporting with traditional assets.

“It’s important to remember that the crypto ecosystem is very different from that of traditional assets, so the rules must be tailored accordingly and not capture ecosystem participants that don’t have a pathway to compliance," Smith stated.

This follows Biden’s suggestion to impose taxes on crypto mining in order to decrease mining operations.

In a budget proposal dated March 9, it was proposed that there would be an "excise tax equal to 30 percent of the costs of electricity used in digital asset mining.”

The crypto industry in the U.S. has repeatedly voiced concerns about regulatory choices affecting innovation within the nation.

On Aug. 13, Grayscale Investments CEO Michael Sonnenshein warned that the Securities and Exchange Commission (SEC) constantly resorting to enforcement action will drive crypto firms out of the country.

“If every crypto issue needs to go to a court of law, then as a country, we are squashing the innovation taking place here,” Sonnenshein stated.

In the same vein, Brad Garlinghouse, CEO of Ripple, recently indicated that the crypto industry is shifting away from the U.S. due to its slower crypto regulation process compared to other countries like Australia, United Kingdom and Singapore.

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Using courts for every crypto issuance will squash innovation: Grayscale CEO

August 13, 2023 Coin Telegraph

Brad Garlinghouse

Grayscale CEO Michael Sonnenshein emphasized the need for a balanced regulatory approach to cryptocurrency to avoid hindering innovation in the United States.

Grayscale Investments CEO Michael Sonnenshein highlighted a potential negative outcome for United States economy if the Securities and Exchange Commission (SEC) continues to take a one-by-one approach to regulating the cryptocurrency industry.

During a recent interview with Fox Business, Sonnenshein expressed that the SEC could drive crypto firms out of the country by constantly resorting to enforcement actions against the industry.

“If every crypto issued needs to go to a court of law, then we are squashing the innovation taking place here,” Sonnenshein stated.

*Grayscale CEO Michael Sonnenshein on Fox Business 'The Claman Countdown'. Source: Fox Business*

Likewise, Ripple CEO Brad Garlinghouse echoed similar comments prior to the partial victory of Ripple, which was decided on July 13.

Garlinghouse expressed that the SEC is “looking to kill” innovation and the cryptocurrency in the U.S.

However, Sonnenshein holds a positive outlook regarding the ongoing developments Congress is taking to provide regulatory clarity for the industry.

“A lot of this legislation that this congress could very well pass, could give the industry the actual clarity it needs to move forward in a way that embraces crypto” Sonnenshein stated.

On July 31, Cointelegraph reported that the House Financial Services Committee (FSC) approved the Financial Innovation and Technology for the 21st Century Act with a 35-15 vote.

The act aims to establish registration rules for crypto firms under the jurisdiction of either the Commodity Futures Trading Commission (CFTC) or the SEC.

Sonnenshein pointed out that the SEC is assessing the wrong criteria when determining which Bitcoin ETF should be introduced to the market.

“When I think about the process that the SEC should be untaking here, it’s really not to pick winners and losers, it is to ensure that all the right disclosures are put out there for investors.”

Sonnenshein further explained during the interview that there is room for several spot Bitcoin products on the market.

“We’ve been ready for a world where there are multiple spot Bitcoin products, where there are multiple bitcoin future products on the market" Sonnenshein stated.

He argued that the SEC’s previous approval of the Bitcoin Futures ETF implies it does in fact have an adequate oversight of the Bitcoin market.

“They do not believe there is sufficient surveillance in the underlying Bitcoin market[...]The SEC already has the tools to approve spot Bitcoin ETFs."

On Aug. 11, the SEC delayed its decision on the outcome of the spot Bitcoin ETF proposed by ARK Investment Management.

After its publication in the Federal Register, the SEC initiated a public comment period for the ARK 21Shares Bitcoin ETF.

This marks the most recent postponement in the regulatory decision-making process regarding the approval or disapproval of a spot crypto ETF in the U.S.

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Grayscale CEO: BlackRock ETF filing a ‘moment of validation’ for Bitcoin

July 12, 2023 Coin Telegraph

blackrock

BlackRock’s commitment to advancing its crypto efforts only lends to the validity of Bitcoin as an asset class, said Michael Sonnenshein.

The recent tsunami of spot Bitcoin (BTC) exchange-traded fund (ETF) filings should be seen as a “moment of validation” for Bitcoin, says Grayscale Investments CEO Michael Sonnenshein.

During a July 12 interview on CNBC’s Last Call, Sonnenshein rejected the notion that BlackRock’s entrance to the Bitcoin ETF race made it “uncool.”

“To see, literally, the largest asset manager in the world publicly commit to advancing their crypto efforts only lends to the validity of the asset class and the staying power it has.”

In just the last four weeks, at least seven major institutional firms including BlackRock have applied for a spot Bitcoin ETF in the United States.

"It's a moment of validation," says @Grayscale CEO @Sonnenshein on $BLK aiming to launch a $BTC spot ETF. "To see the largest asset manager in the world publicly commit to advancing their crypto efforts only lends validity to the asset class and the staying power that it has." pic.twitter.com/agt7emHWt0
— Last Call (@LastCallCNBC) July 11, 2023

If approved, both institutional and retail investors in the U.S. would have a simple, legally compliant way of getting exposure to the price of Bitcoin without actually owning any.

“The ETF wrapper is tried and true and it has become the access point for so many different assets, whether they’re commodities or stocks,” said Sonnenshein.

“Bitcoin is an asset that’s not going away. Investors want and deserve access to it.”

Up until this point, Sonnenshein’s Grayscale has been offering U.S. investors a roundabout way of gaining exposure to Bitcoin — by enabling investors to trade shares in trusts holding large pools of Bitcoin via its Grayscale Bitcoin Trust (GBTC).

Today, our attorneys filed a letter with the DC Circuit highlighting the disparity between the SEC’s approval of a leveraged #bitcoin futures ETF while continuing to deny approval of spot bitcoin ETFs like $GBTC. Let’s dive deeper. /6 pic.twitter.com/z7WyGBthhT
— Grayscale (@Grayscale) July 10, 2023

However, the firm wants to convert it to a spot Bitcoin ETF too, which would allow inventors a far simpler method to trade the price of Bitcoin without GBTC’s pesky discount to net asset value.

“To be able to give investors Bitcoin exposure through GBTC, like we do today has been an unbelievable milestone [...] But moving to an ETF structure will give investors the additional protection that they want.”

In June 2022, Grayscale filed a lawsuit against the United States Securities and Exchange Commission over the rejection of its 2021 application to convert its GBTC.

“If we’re successful in that challenge, there’s actually billions of dollars of investor capital that would be unlocked through that,” said Sonnenshein.

The price of Bitcoin shot upwards of 20% in the days after BlackRock’s filing for a spot Bitcoin ETF on June 15, reaching a year-high of $31,460 on July 6. It is currently trading at $30,633.

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GBTC approval could return a ‘couple billion dollars’ to investors: Grayscale CEO

February 26, 2023 Coin Telegraph

Bitcoin Futures ETF

Grayscale Investments' boss, Michael Sonnenshein, said that if GBTC got the green light to "convert" to a spot Bitcoin ETF there would "no longer" be a discount or a premium, amid ongoing legal action against the SEC.

Grayscale Investments' CEO Michael Sonnenshein stated he “can’t imagine” why the United States Securities and Exchange Commission (SEC) “wouldn’t want” to protect Grayscale investors and return the true asset value to them, in a recent podcast interview.

In an interview with What Bitcoin Did, a popular podcast hosted by Peter McCormack, on Feb. 25, Sonnenshein explained that the SEC “violated the administrative procedures act” by denying Grayscale Bitcoin Trust (GBTC) to be an approved spot Bitcoin (BTC) exchange-traded fund (ETF), in June 2022.

He explained that this act ensures the regulator doesn’t show “favoritism,” or act “arbitrary,” adding that by approving Bitcoin Futures ETF, whilst rejecting “GBTC's conversion,” the SEC has acted “arbitrarily.”

Sonnenshein noted that when the SEC started approving the first Bitcoin ETFs, Grayscale took it “as a sign” that the SEC was “changing their attitude to Bitcoin.”

He stated that there is actually a “couple billion dollars” of capital that would immediately go right back into investors pockets, on an overnight basis, as the fund would "bleed back" up to its net asset value, upon being approved as a spot Bitcoin ETF.

Sonnenshein explained that this is due to GBTC currently trading at a discount to its net-asset-value (NAV), but if it were to convert to an ETF, there would “no longer” be a discount or a premium, there’d be an “arbitraged mechanism” embedded.

He reiterated that Grayscale is in the process of “suing the SEC now,” and could have a decision challenging the SEC denial of its initial application, by as late as “fall 2023.”

He also noted that Grayscale has over a “million investor accounts," with investors all over the world counting on the firm to “do the right thing for them.”

Sonnenshein “can’t imagine” why the SEC wouldn’t want to “protect investors” and “return that value” to them.

It was noted that Grayscale isn't going “to shy” away from the fact that it has a “commercial interest” in this approval, with Sonnenshein noting if the application to challenge the SEC gets denied, Grayscale might be able to appeal the case at the U.S. Supreme Court.

This comes after the SEC filed a 73-page brief with the U.S. Court of Appeals for the District of Columbia Circuit in Dec. 2022 outlining its reasons for denying Grayscale’s request to convert its $12-billion Bitcoin Trust into a spot-based Bitcoin ETF, in June 2022.

The SEC based its decision on findings that Grayscale’s proposal did not sufficiently protect against fraud and manipulation.

The agency had made similar findings in a number of earlier applications to create spot based Bitcoin ETFs.

Court to hear oral arguments in Grayscale’s lawsuit against the SEC in March

January 25, 2023 Coin Telegraph

Appeal

Grayscale had expected it wouldn’t be able to voice arguments until the second quarter, and is calling the quicker timeline “welcome news.”

A United States appeals court is set to hear the oral arguments relating to Grayscale Investment’s lawsuit against the Securities and Exchange Commission (SEC) over its decision to deny Grayscale’s Bitcoin (BTC) spot exchange-traded fund (ETF).

According to a court motion filed on Jan. 23, both sides will present their arguments at the District of Columbia Court of Appeals on March 7, at 9:30 am local time.

Oral arguments are spoken presentations delivered by attorneys summarizing why their clients should win the case. Each party in the case takes turns directly speaking and answering questions from the judge and is given equal amounts of time to do so.

Mark your calendars. Oral Arguments in our case challenging SEC decision to deny $GBTC conversion to a spot #bitcoin ETF was just scheduled for
*Tuesday, March 7, 2023 @ 930 AM EST*. pic.twitter.com/PMQVUsebMO
— Craig Salm (@CraigSalm) January 24, 2023

In a tweet on Jan. 24, Grayscale Chief Legal Officer Craig Salm said the newly filed motion was “welcome news” as they were previously anticipating oral arguments to be scheduled “as soon as Q2.”

The composition of the argument panel in the Grayscale case will be revealed on Feb. 6, 30 days prior to the date of the oral argument, while the amount of time for the argument will be set in a separate order, according to the motion.

Grayscale updates its appeals timeline with the date for the Oral Arguments motion Source: Grayscale

Grayscale initiated its lawsuit against the SEC in June after the regulator rejected its application to convert its $12 billion Grayscale Bitcoin Trust (GBTC) into a spot-based ETF.

Earlier this month, Grayscale filed a reply brief with the D.C. Court of Appeals, claiming the SEC acted arbitrarily in treating spot-traded ETFs differently from futures-traded products and that the SEC exceeded its authority when it denied Grayscale’s application for a Bitcoin ETF.

Grayscale CEO Michael Sonnenshein reiterated a similar point during an interview on CNBC’s Squawk Box on Jan. 24, stating:

“It’s important to remind the role that regulators like the SEC play when it comes to investors. They’re not here to tell investors what to or what not to invest in. They’re here to ensure all the proper disclosures are made [...] so [investors] are aware of all the risks associated.”

"Crypto is here to stay. Regulators are not here to tell investors what to and what not to invest in. They're here to ensure all the proper disclosures are made...so investors understand all the risks associated," says @Grayscale @sonnenshein. "That's really the role of the SEC." pic.twitter.com/k30y6DewBe
— Squawk Box (@SquawkCNBC) January 24, 2023

Sonnenshein said they were “certainly expecting” a decision from the courts regarding its case against the SEC in “Q2 or Q3 of this year.”

“The frustrating thing for investors and certainly the Grayscale team is that we’re actually a business that was born in the U.S., made use of existing U.S. regulatory frameworks to bring crypto to investors in a safe and compliant way.”

“Meeting with both houses yesterday and today, what we’re really hearing [...] is that had the SEC already approved this spot-Bitcoin ETF [...] a lot of the recent investor harm we’ve seen in crypto would’ve been prevented,” he added.

Michael Sonnenshein

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