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August 7, 2021 01:30 am
Original Link: http://rss.slashdot.org/~r/Slashdot/slashdot/~3/2o85ZkWOj70/the-future-of-cryptocurrency-is-being-decided-in-bidens-infrastructure-bill
The Future of Cryptocurrency Is Being Decided in Biden's Infrastructure Bill
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."Read more of this story at Slashdot.
Original Link: http://rss.slashdot.org/~r/Slashdot/slashdot/~3/2o85ZkWOj70/the-future-of-cryptocurrency-is-being-decided-in-bidens-infrastructure-bill
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