US Congress Members Clash on the Potential Effect of Proposed Tax Rules on the Crypto Industry

Members of the U.S. Congress have expressed concerns about the possible problems that implementing the newly proposed crypto tax reporting requirements could create in the entire industry. Patrick McHenry, Cynthia Lummis, and others reacted differently to the potential effects of these proposals on decentralized finance platforms and stablecoins.

U.S. Congress Members Concerned Over New Tax Obligations for Defi Exchanges and Stablecoins

Several U.S. Congress members have expressed concerns over the newly proposed crypto-related tax reporting rule revealed recently by the U.S. Treasury Department and the Internal Revenue Service (IRS) and its possible effect on several elements of the cryptocurrency industry.

In a recent post on social media, Wyoming Senator Cynthia Lummis stated that while she was encouraged by the exclusion of significant parts of the crypto machinery, including miners, stakers, validators, and wallet providers, others were still included in the proposal.

Lummis, who has stressed the crypto industry is being pushed offshore before, declared:

I’m encouraged to see the U.S. Treasury finally issue its rules regarding tax reporting requirements for crypto brokers … however, I have serious concerns about the rule’s potential impact on decentralized crypto asset exchanges & its treatment of U.S. dollar-backed stablecoins.

The recently presented proposal would require cryptocurrency brokers to divulge information about their customers, giving the IRS names, addresses, and gross proceedings related to each customer transaction.

Also, the proposal’s definition of “broker” would require some decentralized finance exchanges to report the same information. This has been criticized by industry actors, who say that it makes compliance difficult.

Lummis encouraged anyone impacted by this rule to submit comments to the Department of the Treasury and the IRS during the public comment period, which will be open for two months.

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Other members of Congress have also criticized the proposal, stating that it could disrupt the activities of the cryptocurrency industry in the U.S.

Patrick McHenry, Chairman of the House Financial Services Committee, said on August 25 that this rulemaking proposal constituted an “ongoing attack on the digital asset ecosystem” from the Biden administration.

McHenry stated:

The Biden Administration must end its effort to kill the digital asset ecosystem in the U.S. and work with Congress to finally deliver clear rules of the road for this industry.

Nonetheless, Senator Elizabeth Warren has supported this proposal, explaining that “a strong rule is essential to prevent wealthy tax cheats from hiding income in digital assets, and one should be implemented by the end of the year.”

What do you think about the reaction of Congress to the crypto tax proposal? Tell us in the comments section below.