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Senators move to exempt Bitcoin, crypto miners from proposed U.S. tax rules

229 points by _-david-_ 5y ago

dougSF70 5y ago
Obviously HN community is down on crypto. This exemption is a sign that Bitcoin is getting closer to the mainstream of finance. Like most flanker-moves, Governments should be incorporating it in to their tax policies rather than shunning it. Cannabis is a good proxy, states can keep it illegal and not make tax revenue or they can legalize it, control it and tax it. The feds should do the same. Same for crypto, keeping it on the fringes will only help illegal enterprises and rogue nations use it to bypass sanctions. As to whether it has a use or is a store of value, these are largely irrelevant questions. It is pure speculation, allowing one person to bet against another, much like playing poker in a casino.
- nickthemagicman 5y ago
  Isn't crypto a direct threat to their power? If finance can't be tracked it can't be taxed. If it's mainstream more and more people could potentially switch to crypto, which would reduce their tax collections. Just theorizing. I have no idea if this would happen.
  - whateveracct 5y ago
    BTC can be tracked better than cash
    - nprz 5y ago
      So why are ransomware hackers never prosecuted?
      - khuey 5y ago
        Because they live and operate in jurisdictions without extradition treaties.
        nprz 5y ago
        So they might as well just ask for their ransom via a wire transfer or paypal? Since their identity will be known anyway.
        tylersmith 5y ago
        If ransomware used PayPal accounts or bank numbers those payments would quickly start being censored to cut off their payment rails. The value of crypto is all rooted in censorship resistance, not anonymity.
        nprz 5y ago
        Wouldn't it have to be an agency in their own jurisdiction that would prevent the hacker from accessing banking services? They would make an effort to shut down the hackers bank account but not prosecute them?
        khuey 5y ago
        The pressure point in the traditional financial system is not the Russian authorities cutting off the Russian hacker from a Russian bank, it's SWIFT cutting off the Russian bank from the global financial system.
      - amalcon 5y ago
        Because they typically operate out of jurisdictions that don't feel like prosecuting them.
        nprz 5y ago
        Why not just ask for a paypal or a wire transfer then? If they don't care about revealing their identity?
        nitrogen 5y ago
        Those are usually easily reversible.
      - CamelCaseName 5y ago
        If there's one thing I've learned, it's that illegality is irrelevant. Only what laws are enforced, and how quickly they are enforced, matters.
      - gzer0 5y ago
        Usually it involves conversion of illegally gained assets into untraceable cryptocurrencies such as XMR (Monero) and then subsequent funneling and conversion of those assets back into USD via offshore exchanges. IRS is offering $625,000 USD to anyone that can crack the Monero algorithm [1]. [1] https://www.forbes.com/sites/kellyphillipserb/2020/09/14/irs-will-pay-up-to-625000-if-you-can-crack-monero-other-privacy-coins/?sh=5155f02785cc https://www.forbes.com/sites/kellyphillipserb/2020/09/14/irs...
        fabianhjr 5y ago
        > conversion of those assets back into USD via offshore exchanges. They would probably not exchange into USD, there are plenty of other currencies and they would probably favor a local currency.
      - tablespoon 5y ago
        > So why are ransomware hackers never prosecuted? Because they're typically based in Russia, and Russia has a policy that it will not prosecute its citizens for computer crimes unless they perpetrated them against Russians or Russian organizations. My understanding is most ransomware has code to detect Russian computers (e.g. by checking localization settings), and will refuse to run if it finds itself on one for that reason. https://krebsonsecurity.com/2021/05/try-this-one-weird-trick-russian-hackers-hate/ https://krebsonsecurity.com/2021/05/try-this-one-weird-trick...
        nprz 5y ago
        So why not just send the payment to a Russian bank?
        tablespoon 5y ago
        > So why not just send the payment to a Russian bank? I don't know, I'm not a Russian in the ransomware business. But I speculate that doing it that way might be so blatant and inconvenient to the Russian government that it might get the policy that protects them changed. Also, I'd imagine any bank that accepts such payments would quickly get itself blacklisted. This stuff isn't actually binary, so it's not smart to take it to the limit.
        zaphar 5y ago
        Because Russian banks need to be capable of transacting with American banks and directly receiving money that is Ransom Payment related is a bad business decision.
        nprz 5y ago
        So you're saying sending money to a bitcoin address would help obscure the identity of the receiver?
        zaphar 5y ago
        No I'm saying a Russian bank probably doesn't look past the deposit. But if the deposit comes from America then an American bank will ask for it back when the US govt tells it to and then the bank will do so because it's good business. So I would imagine most ransomware gangs just keep the money in bitcoin and only pull out what they need to when they need to.
      - meowface 5y ago
        Because trackable doesn't mean "always trackable to a real human identity who's the original source". Bitcoin transactions are trivial for anyone to track, since everything is recorded on the public blockchain, but you can't necessarily follow the trail to the true culprit even if you're law enforcement. Especially if there are non-cooperative entities in the chain who are completely outside of your jurisdiction. Though, the true answer to your actual question is what the other commenter said: it's mainly due to the Russian government turning a blind eye to it as long as they don't target Russian/ex-USSR citizens. So even if you do know a ransomware operator's full name and home address and everything else you can possibly know about them, you can't do anything about it besides hope they leave the country and try to catch them then.
    - drcode 5y ago
      Sure, if you don't use mixers
      - ghostbrainalpha 5y ago
        Side question: How difficult is it to use a mixer? If you have the tech skills to mine bitcoin is it trivial to find and use a mixer, or is it something requiring more specific expertise?
        drcode 5y ago
        Not too difficult, though I've never done it so can't say for sure.
        tracedddd 5y ago
        It’s relatively trivial to use a mixer, just like sending any other transaction. The mixer deals with all the complexity. However almost all mixers have been eventually compromised. It’s likely chainalysis and others can easily demix the transactions, so they really shouldn’t be entirely trusted.
      - rblatz 5y ago
        Yes, laundering money does tend to obscure the source of money.
        drcode 5y ago
        Money laundering is when you make it look like illicit money derived from a legitimate income stream, paying the taxes that result from such income.
      - dragontamer 5y ago
        I'm pretty sure mixers are currently illegal and will be treated as such once the debate starts. Money laundering (aka, pooling cash together to make it harder to track) is defacto illegal by itself, even if you use the money for legitimate purposes.
    - piker 5y ago
      Good luck moving more than a few $100ks in cash.
      - deleted 5y ago
        [deleted]
  - JohnJamesRambo 5y ago
    If they wanted to squash it they should have done it much earlier (if it was possible at all and wouldn't have just caused Streisand Effect). Now you have congressmen with laser eyes on 100k bitcoin twitter profile pics, the head of SEC taught classes about blockchain at MIT; it is way too late. The smart thing is to embrace it, the complete opposite of the Chinese government course of action. You set back the entire nation by not embracing innovation.
    - de_keyboard 5y ago
      I don't think crypto can be blocked at this point - there will always be a communication channel for sharing blocks. Hell, it could be done via SMS messages if necessary. They can significantly hurt the price but limiting reputable shops from accepting it though.
  - fabianhjr 5y ago
    > Isn't crypto a direct threat to their power? It isn't since it doesn't change property relations. It is more of a "different asset" they could own and speculate with. > If finance can't be tracked it can't be taxed. Crypto-tokens are very traceable and most can be deanonymized by forensic accountants. > If it's mainstream more and more people could potentially switch to crypto, which would reduce their tax collections. It wouldn't and most people aren't savy enough in cybersecurity to avoid having their tokens stolen. (And most protocols don't have a chargeback or recovery mechanism)
  - spicymaki 5y ago
    > Isn't crypto a direct threat to their power? It is not a threat to their power, imagine the corrupting power of being able to produce wealth anonymously without being traced or taxed and having that sanctioned by the government.
  - jandrese 5y ago
    No more than Pork Futures are a threat to their power. This is plain old fashioned finance guys paying off senators to make tax loopholes for them.
  - JumpCrisscross 5y ago
    > Isn't crypto a direct threat to their power? I don't know where this meme came from. If the U.S. government declared Bitcoin legal tender tomorrow, it would be monumental. But practically speaking, not that much would change. The Fed would buy Bitcoin the way e.g. the Swiss National Bank buys dollars and euros. And the Treasury would issue Bitcoin bonds or something, I don't know. Cryptocurrencies currently make it easier to evade taxes, which benefits the rich, and easier to make money in a host of new financial activities, which benefits those near those activities, i.e. people with money and banks and first movers in the technology.
  - tmn 5y ago
    Most people thought the internet was a threat to the establishment. In all likelihood bitcoin was developed by the NSA.
- PragmaticPulp 5y ago
  > This exemption is a sign that Bitcoin is getting closer to the mainstream of finance. I think it’s more a sign that crypto is mainstream finance now. Specifically, the type that has enough money sloshing around at the top to warrant lobbying efforts and mingling with the finances of regulators. > Same for crypto, keeping it on the fringes will only help illegal enterprises and rogue nations use it to bypass sanctions. None of this has any impact at all on whether or not crypto is used for illicit purposes in other locations. Crypto is also already taxed and legal, so the comparison to cannabis doesn’t make sense either.
  - dougSF70 5y ago
    Sure, there are substantive differences between Crypto and Cannabis, the point I was trying to make is that Bitcoin is beyond the tipping point. The point that makes sense to bring it into the fold. Secondly, if the USA is seen to be focussed on legitimizing crypto then this would be a signal to NK / RU hacking groups that US Government Agencies are taking an active interest and including it in their daily operational scope. Given the tentacles of US enforcement, this could help limit use of BTC (not all crypto) for illicit purposes.
    - PragmaticPulp 5y ago
      > the point I was trying to make is that Bitcoin is beyond the tipping point It’s no longer about Bitcoin. It’s about alternative asset classes. I think the new ventures in the crypto space have realized that BTC is old news and that the real money is in creating endless new crypto assets and ventures.
      - dougSF70 5y ago
        I guess that is the worry of any government: money that could fuel the economy gets spirited away into dubious Crypto ventures - e.g. Dogecoin. BTC might be old news but it isn't a deliberate scam.
        jazzyjackson 5y ago
- verdverm 5y ago
  > Obviously HN community is down on crypto. This will earn you downvotes because it is a childish sentiment of HN. Many on HN dislike crypto in its current form of lawlessness. Regulation like this is a positive step for the ecosystem. Cryptos will still have to prove their value outside of finance to become more accepted by HN.
  - dougSF70 5y ago
    Point taken, this characterization is too broad.
    - sleepybrett 5y ago
      Since 99% of tokens out there are specifically created as pump and dump schemes i'm not sure that it's all that over-broad.
- vmception 5y ago
  What is most significant about this is that all crypto bills have died in committee before now. And suddenly, all at once, crypto is being debated on the floor of the whole senate in a bill that the President wanted. They are recognizing it as a distinct asset class that is able to have attributes of other asset classes. This means old money has to wake up now.
  - fabianhjr 5y ago
    > In the sociological sense, recuperation is the process by which politically radical ideas and images are twisted, co-opted, absorbed, defused, incorporated, annexed or commodified within media culture and bourgeois society, and thus become interpreted through a neutralized, innocuous or more socially conventional perspective. More broadly, it may refer to the cultural appropriation of any subversive symbols or ideas by mainstream culture. https://www.wikiwand.com/en/Recuperation_(politics) https://www.wikiwand.com/en/Recuperation_(politics)
- overtonwhy 5y ago
  Bitcoin is built on a house of Tether. https://www.coindesk.com/tether-first-reserve-composition-report-usdt https://www.coindesk.com/tether-first-reserve-composition-re...
- lamontcg 5y ago
  Cannabis isn't a distributed ponzi scheme.
- kelnos 5y ago
  I'm confused about your position on this, though: the amendment in question ensures certain cryptocurrency-related activities won't be taxed. I agree that we shouldn't be banning this sort of thing, but if people want to throw electricity at it in ways that I consider a huge waste of resources, I'd really like to see that taxed better. And not in a regressive way that makes every electricity user pay more. > Obviously HN community is down on crypto. I don't really think that's true, and please remember that the HN community is not homogeneous, and various people have very different (and strong) opinions on many things. I'm personally not a fan of cryptocurrency (I think it's a waste of time and effort, and to top it off it's currently an environmental disaster), but the top comments on this article are relatively positive right now. I believe @dang has mentioned often that early comments on most articles end up being pretty negative, because the early posts will be more knee-jerk (which tends to bring out the worst reactions in people). Only after people have time to read and cool down will posts be more measured. This article was only posted an hour ago (at the time I'm writing this), so no surprise there's a lot of negativity here.
  - saalweachter 5y ago
    > ... please remember that the HN community is not homogeneous, and various people have very different (and strong) opinions on many things. Honestly I'm not sure I consider HN a "community" in the same way I consider other online ... communities, communities. With notably rare exceptions you don't have a lot of sharing of personal milestones, and while you might occasionally "recognize" a poster (and we have a few "famous" ones) it's much easier to deal with each comment as a stand-alone statement without any provenance. Even meta-discussion about the nature of HN like this seems a bit gauche and is discouraged.
  - macawfish 5y ago
    No no no, the amendment doesn't say that those activities can't be taxed, it clarifies that there won't be KYC requirements on people who literally can't comply with them. The issue here isn't about what activities should be taxed, it's about overly broad KYC reporting requirements. Pretend the original provision was about ATMs... the language could be used to argue that armored truck drivers should be required to collect personal information and transaction data for every user of every ATM they deliver cash to. Obviously that's not really possible and would be a huge privacy issue. The risk people are seeing here is that the current language could be abused to make ATMs illegal altogether, since nobody would want to risk getting in trouble during the process of stocking them.
- hncurious 5y ago
  "Cannabis is a good proxy, states can keep it illegal and not make tax revenue or they can legalize it, control it and tax it." That should be a great proxy, but regulators have so overburdened legal dispensaries that they need to be bailed out. Illegal sources could have been easily been made extinct or at least sidelined, but are still able to thrive because the overhead to get a license and stay licensed is so immense. https://www.latimes.com/california/story/2021-06-14/california-struggling-marijuana-industry-cash-grants-budget https://www.latimes.com/california/story/2021-06-14/californ...
  - dmix 5y ago
    Here in Canada there's a ton of shops that look like normal dispensaries but are just unlicensed ones. Their product selection is usually way better and includes co2 extracted vape products (which last I checked weren't legally available yet and IMO the future of weed consumption) and candy/drinks/etc. They also have better websites which cheap same-day delivery, usually within a few hours. The municipal governments try to shut them down with daily fines but they either eat the cost because it's so lucrative or shut down temporarily and pop up somewhere else. At least one shop had large bricks put in front of them at multiple locations and they just put someone outside with a square tablet and sold it there. https://globalnews.ca/news/5369230/cement-blocks-illegal-marijuana-dispensaries/ https://globalnews.ca/news/5369230/cement-blocks-illegal-mar... I highly doubt the underground/grey markets will go away.
Guest42 5y ago
Sidetopic, but I am rather disappointed that Venmo has been pressuring me via email to embrace crypto and imagine behind the scenes they own however much, trades only get executed internally, and they do their best to extract transaction fees. To me this is the antithesis of what the crypto community was looking to stand for in terms of privacy and independence from traditional banking systems.
- toomuchtodo 5y ago
  Venmo is pushing crypto hard because Instant Payments are coming down the pipeline from the Fed in the next 18 months (already in beta testing with a handful of smaller banks, they're ahead of schedule based on my reading of the roadmap), and that kills Venmo (and Paypal to a lesser extend) if they don't have something to pivot to. That's what you're seeing Visa, Paypal, and others attempt to go upmarket (business payments) or branch out (crypto, Plaid acq attempt).
  - Guest42 5y ago
    Interesting, I’ll have to research that. It seems like something that would take a long time to deploy.
    - toomuchtodo 5y ago
      It's been in the works for years. https://www.pymnts.com/news/faster-payments/2021/five-banks-test-fednow-real-time-payments-system/ https://www.pymnts.com/news/faster-payments/2021/five-banks-... https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federal-reserves-planned-instant-payments-service/ https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federa...
      - deleted 5y ago
        [deleted]
      - spinax 5y ago
        Thanks for sharing, I as well didn't know about this. I've enrolled/used Zelle (via my bank app) and it's just a travesty of usability to me, after awhile I ditched it (and I don't hear a lot in the news about Zelle these days). What's your hot take on this new FedNow system vs. what Zelle tries to achieve via ACH? Do you think it'll be more "Venmo-like" (low friction) or will it end up a usability mess due to regulation requirements?
drcode 5y ago
It seems rather unprecedented that there are currently US citizens who are billionaires because of their crypto holdings, without the government having any insight into precisely who these people are. It seems like eventually the government is going to push for more onerous reporting laws to return to the usual equilibrium, where the government has at least some basic idea regarding who owns what (which I think they currently have, even for offshore bank accounts) (not that I in any way support more aggressive reporting laws)
- PragmaticPulp 5y ago
  > It seems rather unprecedented that there are currently US citizens who are billionaires because of their crypto holdings, Perhaps, but it’s not as common as it sounds. Maybe there are people out there who invested $33,000 into Bitcoin when it was $1 and then didn’t sell a single penny as it rose and crashed multiple times, but the number of people achieving billionaire status without starting out with tens of millions invested is going to be quite small. Also, once you pass a specific threshold of wealth it doesn’t pay to flout the rules and risk increasing consequences. Famous and wealthy people have gone to prison for tax evasion in the range of millions of dollars. Trying to dodge taxes to remain a billionaire instead of paying the relatively small capital gains taxes wouldn’t be a rational move. Anyone sitting on huge amounts of crypto worth has likely hired teams of lawyers to cross every t and dot every i to stay in full compliance rather than put their windfall at risk for some irrelevant level of taxation.
  - drcode 5y ago
    Agree with all of this, except that I don't think these folks are currently reporting their holdings, as there is currently no requirement to do this.
  - TigeriusKirk 5y ago
    There aren't a huge number of crypto billionaires (though your calculations miss those who rode other crypto waves with their bitcoin profits), but there are a decent number of people in the upper 10-figure lower 11 figure range. Outside of Satoshi, the number of those people who are anonymous at a governmental level has got to be quite small.
ilaksh 5y ago
I have heard that they are aiming to make an exception for Bitcoin only but try to stop everything else. That would be a really horrible outcome because Bitcoin is by far the most outdated and least useful cryptocurrency.
- vmception 5y ago
  nobody is trying to make an exception for just bitcoin, they are trying to fix it for the whole class of crypto and broader digital payments
  - nootropicat 5y ago
    The new amendment does exactly that. He had good info. https://www.coindesk.com/senator-who-wrote-controversial-crypto-tax-rule-proposes-modest-revision https://www.coindesk.com/senator-who-wrote-controversial-cry... Really evil to explicitly promote proof of work.
    - vmception 5y ago
      Dogecoin is proof of work, so is Litecoin, and Monero, and Ethereum Classic and.... still should be more inclusive to validators, delegates, stakers and others, thats a separate discussion
runawaybottle 5y ago
The finance industry will never say no to yet another financial instrument. These people will trade anything if you leave it up to them.
danielvf 5y ago
Finally found the text of the amendment: https://www.finance.senate.gov/imo/media/doc/Wyden%20Lummis%20Toomey%20Crypto%20Amendment.pdf https://www.finance.senate.gov/imo/media/doc/Wyden%20Lummis%... The amendment is short and explicitly notes that that the following categories do not count as brokers: (A) validating distributed ledger transactions (B) selling hardware or software for which the sole function is to permit a person to control private keys which are used for accessing digital assets on a distributed ledger, or (C) developing digital assets or their cor- responding protocols for use by other persons, provided that such other persons are not cus- tomers of the person developing such assets or protocols.
- Tepix 5y ago
  I guess we need a proper CO2 tax to encourage better technology than proof of work
  - sputknick 5y ago
    ETH PoS mainnet transition is underway and will be completed early 2022. With this holders of ETH will be able to earn fees from transactions, just by running an application on their standard normal computer. The only encouragement you need to move off of POW is profit motive.
    - whichquestion 5y ago
      Hasn’t PoS been something “in the works” for ETH for something like 6 years now[1]? I don’t think anything guarantees its delivery in early 2022, it all seems like hopeful speculation until they deliver something. [1] This stackexchange question dates back to 2016, the earliest evidence I could find of ETH proposing PoS. https://ethereum.stackexchange.com/questions/9/why-does-ethereum-plan-to-move-to-proof-of-stake/75 https://ethereum.stackexchange.com/questions/9/why-does-ethe...
      - tornato7 5y ago
        This time it's very different. There are billions of dollars of ETH locked up in the staking contract, and proof of stake has been live and operating on the beacon chain for many months.
backprop1993 5y ago
They want to exempt miners who are making Bitcoin from paying taxes on it? Why? They are making revenue from this activity. Of course they should pay taxes on that revenue. This makes no sense at all.
- uncomputation 5y ago
  Did you read the article? This is just about exempting non-exchanges from “broker” status i.e. keeping track of users’ personal information, transaction history, and data. The representatives said they agree people not paying taxes on crypto is a problem, but classifying them as brokers is not the solution.
  - skybrian 5y ago
    Why isn’t it part of the solution? It seems like keeping track of who buys mining equipment (at least at large scale) would be a pretty important component in making sure that they pay taxes? Just like it’s important that brokerages report your stock transactions to the IRS.
    - freeone3000 5y ago
      This is not what broker requirements are. If you are under broker requirements, and you wish to mine a new block, you must have, for every transaction you include in the block, the legal name of the person whose transaction it is, their address, and whether they are a politically compromised individual (ex, a general or politician of a nation that is not the US). For every transaction you're going to include in the block. This information is reasonable to expect from brokerages and exchanges, but not from miners, who are merely transaction processors.
      - RandomLensman 5y ago
        Payment facilitators and processor would normally fall under some sort of KYC regime, I think (let's say when onboarding a merchant). Arguably, there isn't really a one-to-one correspondence with a miner, but to completely exempt miners here is an interesting twist.
mola 5y ago
This means that people with deep pockets, with money which came from who knows where and was laundered through Bitcoin, just bought the US Senate.
- flyingfences 5y ago
  No, it just means that there are three people in the Senate who recognize that labelling wallet devs -- or anyone other than actual exchanges -- as "brokers" is impractical and serves no purpose.
jnwatson 5y ago
What counts here as a digital asset? World of Warcraft coins? Steam collectible cards?
- robot_no_419 5y ago
  Yes, those are all digital assets. It's a much broader class of assets than just virtual currencies (ie, cryptocurrencies) that includes photos, electronic records, and pretty much everything that's electronically stored and can be owned by a person. It's also not really a legally defined term, so there are bound to be different definitions and interpretations. I got my definition from https://www.americanbar.org/content/dam/aba/administrative/business_law/buslaw/committees/CL620000pub/digital_assets.pdf https://www.americanbar.org/content/dam/aba/administrative/b... See also the wiki, which provides a similar definition: https://en.wikipedia.org/wiki/Digital_asset https://en.wikipedia.org/wiki/Digital_asset
- RandomLensman 5y ago
  Sounds like it is a defined term: https://www.rpc.senate.gov/legislative-notices/hr-3684_infrastructure-investment-and-jobs-act https://www.rpc.senate.gov/legislative-notices/hr-3684_infra...
  - jnwatson 5y ago
    Good source. "Additionally, the provision clarifies that the definition of specified security includes a digital asset, which is defined as any digital representation of value that is recorded on a cryptographically secured distributed ledger or any similar technology." That means that WoW coins don't count (but NFTs do).
animal_spirits 5y ago
> That means that the IRS will not be able to require that miners, stakers and companies that sell hardware or software for storing digital assets report the activities of their customers or crypto users whose transactions they verify. > In a statement, Wyden said that “investors failing to pay tax they owe through cryptocurrency is a real problem,” but that the law as previously written was too broad and would have applied to actors who would not have been able to fulfill its mandates. > The changes will lead to the bill raising $5.2 billion less than the $28 billion envisaged by the initial legislation, according to a Politico report citing the Joint Committee on Taxation. To me, a layman, it seems that they are trying to allow more loopholes for tax evasion through buying and selling bitcoin in certain ways? Or am I completely off base? EDIT: Here [0] is the actual ammendment, so it seems maybe it's just protecting people doing development work on cryptocurrency software/hardware from having to pay taxes.. I think [0] https://news.ycombinator.com/item?id=28075226 https://news.ycombinator.com/item?id=28075226
- meowkit 5y ago
  You’re off base. The original definition was putting tax and KYC requirements on people who don’t have, and can’t get, that information. Network nodes facilitate transactions, they don’t broker them. Its like treating an exchanges electricity provider as part of the equity trade. It’s not tax evasion. The law as originally stated would have crippled the industry in the US.
  - animal_spirits 5y ago
    Interesting, thank you
  - arcticfox 5y ago
    I rarely notice politicians, but Wyden is frequently in the fray on the right side of a lot of issues I hear about. Seems like he got this one right, again.
  - deegles 5y ago
    Devil's advocate for a moment... the definition of a broker is "a person who buys and sells goods or assets for others," or it can mean to "arrange or negotiate" a deal or plan. How is a miner not a broker then? They accept transactions and then place them on a blockchain by performing some kind of work. Sure, at the moment few if any cryptos are definitely securities, but what is going to happen when a company creates (for example) a wrapped SP500 token? A "traditional" broker can't just trust anyone to record a transaction, there is a lot of regulation. Will there be a class of tokens that can only be mined by people who can do KYC on them? Why is a miner exempt from caring about what transactions they accept?
purple_ferret 5y ago
> The changes will lead to the bill raising $5.2 billion less than the $28 billion envisaged by the initial legislation, according to a Politico report citing the Joint Committee on Taxation. How do they come to this conclusion since taxes are still owed? Just that they expect about 5 billion in tax evasion from this?
- tedunangst 5y ago
  They're all made up numbers that exist only to get the bill passed.
jb775 5y ago
In other words, crypto miners are investing in lobbyists.
- memming 5y ago
  Or lobbyists are investing in crypto.
nyghtly 5y ago
This headline might as well be click bait. It's important to remember that this is a proposed amendment. It won't pass unless the infrastructure gang supports it. And it's very unlikely that they will support it, because that would mean that the bill isn't fully funded. Not being funded would kill the bill, because the Republicans who support it are demanding full funding. https://www.politico.com/news/2021/08/03/senate-bipartisan-infrastructure-deal-502267 https://www.politico.com/news/2021/08/03/senate-bipartisan-i...

229 points by _-david-_ 5y ago

Obviously HN community is down on crypto. This exemption is a sign that Bitcoin is getting closer to the mainstream of finance. Like most flanker-moves, Governments should be incorporating it in to their tax policies rather than shunning it. Cannabis is a good proxy, states can keep it illegal and not make tax revenue or they can legalize it, control it and tax it. The feds should do the same. Same for crypto, keeping it on the fringes will only help illegal enterprises and rogue nations use it to bypass sanctions. As to whether it has a use or is a store of value, these are largely irrelevant questions. It is pure speculation, allowing one person to bet against another, much like playing poker in a casino.

nickthemagicman 5y ago
Isn't crypto a direct threat to their power? If finance can't be tracked it can't be taxed. If it's mainstream more and more people could potentially switch to crypto, which would reduce their tax collections. Just theorizing. I have no idea if this would happen.
- whateveracct 5y ago
  BTC can be tracked better than cash
  - nprz 5y ago
    So why are ransomware hackers never prosecuted?
    - khuey 5y ago
      Because they live and operate in jurisdictions without extradition treaties.
      - nprz 5y ago
        So they might as well just ask for their ransom via a wire transfer or paypal? Since their identity will be known anyway.
        tylersmith 5y ago
        If ransomware used PayPal accounts or bank numbers those payments would quickly start being censored to cut off their payment rails. The value of crypto is all rooted in censorship resistance, not anonymity.
        nprz 5y ago
        Wouldn't it have to be an agency in their own jurisdiction that would prevent the hacker from accessing banking services? They would make an effort to shut down the hackers bank account but not prosecute them?
        khuey 5y ago
        The pressure point in the traditional financial system is not the Russian authorities cutting off the Russian hacker from a Russian bank, it's SWIFT cutting off the Russian bank from the global financial system.
    - amalcon 5y ago
      Because they typically operate out of jurisdictions that don't feel like prosecuting them.
      - nprz 5y ago
        Why not just ask for a paypal or a wire transfer then? If they don't care about revealing their identity?
        nitrogen 5y ago
        Those are usually easily reversible.
    - CamelCaseName 5y ago
      If there's one thing I've learned, it's that illegality is irrelevant. Only what laws are enforced, and how quickly they are enforced, matters.
    - gzer0 5y ago
      Usually it involves conversion of illegally gained assets into untraceable cryptocurrencies such as XMR (Monero) and then subsequent funneling and conversion of those assets back into USD via offshore exchanges. IRS is offering $625,000 USD to anyone that can crack the Monero algorithm [1]. [1] https://www.forbes.com/sites/kellyphillipserb/2020/09/14/irs-will-pay-up-to-625000-if-you-can-crack-monero-other-privacy-coins/?sh=5155f02785cc https://www.forbes.com/sites/kellyphillipserb/2020/09/14/irs...
      - fabianhjr 5y ago
        > conversion of those assets back into USD via offshore exchanges. They would probably not exchange into USD, there are plenty of other currencies and they would probably favor a local currency.
    - tablespoon 5y ago
      > So why are ransomware hackers never prosecuted? Because they're typically based in Russia, and Russia has a policy that it will not prosecute its citizens for computer crimes unless they perpetrated them against Russians or Russian organizations. My understanding is most ransomware has code to detect Russian computers (e.g. by checking localization settings), and will refuse to run if it finds itself on one for that reason. https://krebsonsecurity.com/2021/05/try-this-one-weird-trick-russian-hackers-hate/ https://krebsonsecurity.com/2021/05/try-this-one-weird-trick...
      - nprz 5y ago
        So why not just send the payment to a Russian bank?
        tablespoon 5y ago
        > So why not just send the payment to a Russian bank? I don't know, I'm not a Russian in the ransomware business. But I speculate that doing it that way might be so blatant and inconvenient to the Russian government that it might get the policy that protects them changed. Also, I'd imagine any bank that accepts such payments would quickly get itself blacklisted. This stuff isn't actually binary, so it's not smart to take it to the limit.
        zaphar 5y ago
        Because Russian banks need to be capable of transacting with American banks and directly receiving money that is Ransom Payment related is a bad business decision.
        nprz 5y ago
        So you're saying sending money to a bitcoin address would help obscure the identity of the receiver?
        zaphar 5y ago
        No I'm saying a Russian bank probably doesn't look past the deposit. But if the deposit comes from America then an American bank will ask for it back when the US govt tells it to and then the bank will do so because it's good business. So I would imagine most ransomware gangs just keep the money in bitcoin and only pull out what they need to when they need to.
    - meowface 5y ago
      Because trackable doesn't mean "always trackable to a real human identity who's the original source". Bitcoin transactions are trivial for anyone to track, since everything is recorded on the public blockchain, but you can't necessarily follow the trail to the true culprit even if you're law enforcement. Especially if there are non-cooperative entities in the chain who are completely outside of your jurisdiction. Though, the true answer to your actual question is what the other commenter said: it's mainly due to the Russian government turning a blind eye to it as long as they don't target Russian/ex-USSR citizens. So even if you do know a ransomware operator's full name and home address and everything else you can possibly know about them, you can't do anything about it besides hope they leave the country and try to catch them then.
  - drcode 5y ago
    Sure, if you don't use mixers
    - ghostbrainalpha 5y ago
      Side question: How difficult is it to use a mixer? If you have the tech skills to mine bitcoin is it trivial to find and use a mixer, or is it something requiring more specific expertise?
      - drcode 5y ago
        Not too difficult, though I've never done it so can't say for sure.
      - tracedddd 5y ago
        It’s relatively trivial to use a mixer, just like sending any other transaction. The mixer deals with all the complexity. However almost all mixers have been eventually compromised. It’s likely chainalysis and others can easily demix the transactions, so they really shouldn’t be entirely trusted.
    - rblatz 5y ago
      Yes, laundering money does tend to obscure the source of money.
      - drcode 5y ago
        Money laundering is when you make it look like illicit money derived from a legitimate income stream, paying the taxes that result from such income.
    - dragontamer 5y ago
      I'm pretty sure mixers are currently illegal and will be treated as such once the debate starts. Money laundering (aka, pooling cash together to make it harder to track) is defacto illegal by itself, even if you use the money for legitimate purposes.
  - piker 5y ago
    Good luck moving more than a few $100ks in cash.
    - deleted 5y ago
      [deleted]
- JohnJamesRambo 5y ago
  If they wanted to squash it they should have done it much earlier (if it was possible at all and wouldn't have just caused Streisand Effect). Now you have congressmen with laser eyes on 100k bitcoin twitter profile pics, the head of SEC taught classes about blockchain at MIT; it is way too late. The smart thing is to embrace it, the complete opposite of the Chinese government course of action. You set back the entire nation by not embracing innovation.
  - de_keyboard 5y ago
    I don't think crypto can be blocked at this point - there will always be a communication channel for sharing blocks. Hell, it could be done via SMS messages if necessary. They can significantly hurt the price but limiting reputable shops from accepting it though.
- fabianhjr 5y ago
  > Isn't crypto a direct threat to their power? It isn't since it doesn't change property relations. It is more of a "different asset" they could own and speculate with. > If finance can't be tracked it can't be taxed. Crypto-tokens are very traceable and most can be deanonymized by forensic accountants. > If it's mainstream more and more people could potentially switch to crypto, which would reduce their tax collections. It wouldn't and most people aren't savy enough in cybersecurity to avoid having their tokens stolen. (And most protocols don't have a chargeback or recovery mechanism)
- spicymaki 5y ago
  > Isn't crypto a direct threat to their power? It is not a threat to their power, imagine the corrupting power of being able to produce wealth anonymously without being traced or taxed and having that sanctioned by the government.
- jandrese 5y ago
  No more than Pork Futures are a threat to their power. This is plain old fashioned finance guys paying off senators to make tax loopholes for them.
- JumpCrisscross 5y ago
  > Isn't crypto a direct threat to their power? I don't know where this meme came from. If the U.S. government declared Bitcoin legal tender tomorrow, it would be monumental. But practically speaking, not that much would change. The Fed would buy Bitcoin the way e.g. the Swiss National Bank buys dollars and euros. And the Treasury would issue Bitcoin bonds or something, I don't know. Cryptocurrencies currently make it easier to evade taxes, which benefits the rich, and easier to make money in a host of new financial activities, which benefits those near those activities, i.e. people with money and banks and first movers in the technology.
- tmn 5y ago
  Most people thought the internet was a threat to the establishment. In all likelihood bitcoin was developed by the NSA.
PragmaticPulp 5y ago
> This exemption is a sign that Bitcoin is getting closer to the mainstream of finance. I think it’s more a sign that crypto is mainstream finance now. Specifically, the type that has enough money sloshing around at the top to warrant lobbying efforts and mingling with the finances of regulators. > Same for crypto, keeping it on the fringes will only help illegal enterprises and rogue nations use it to bypass sanctions. None of this has any impact at all on whether or not crypto is used for illicit purposes in other locations. Crypto is also already taxed and legal, so the comparison to cannabis doesn’t make sense either.
- dougSF70 5y ago
  Sure, there are substantive differences between Crypto and Cannabis, the point I was trying to make is that Bitcoin is beyond the tipping point. The point that makes sense to bring it into the fold. Secondly, if the USA is seen to be focussed on legitimizing crypto then this would be a signal to NK / RU hacking groups that US Government Agencies are taking an active interest and including it in their daily operational scope. Given the tentacles of US enforcement, this could help limit use of BTC (not all crypto) for illicit purposes.
  - PragmaticPulp 5y ago
    > the point I was trying to make is that Bitcoin is beyond the tipping point It’s no longer about Bitcoin. It’s about alternative asset classes. I think the new ventures in the crypto space have realized that BTC is old news and that the real money is in creating endless new crypto assets and ventures.
    - dougSF70 5y ago
      I guess that is the worry of any government: money that could fuel the economy gets spirited away into dubious Crypto ventures - e.g. Dogecoin. BTC might be old news but it isn't a deliberate scam.
      - jazzyjackson 5y ago
verdverm 5y ago
> Obviously HN community is down on crypto. This will earn you downvotes because it is a childish sentiment of HN. Many on HN dislike crypto in its current form of lawlessness. Regulation like this is a positive step for the ecosystem. Cryptos will still have to prove their value outside of finance to become more accepted by HN.
- dougSF70 5y ago
  Point taken, this characterization is too broad.
  - sleepybrett 5y ago
    Since 99% of tokens out there are specifically created as pump and dump schemes i'm not sure that it's all that over-broad.
vmception 5y ago
What is most significant about this is that all crypto bills have died in committee before now. And suddenly, all at once, crypto is being debated on the floor of the whole senate in a bill that the President wanted. They are recognizing it as a distinct asset class that is able to have attributes of other asset classes. This means old money has to wake up now.
- fabianhjr 5y ago
  > In the sociological sense, recuperation is the process by which politically radical ideas and images are twisted, co-opted, absorbed, defused, incorporated, annexed or commodified within media culture and bourgeois society, and thus become interpreted through a neutralized, innocuous or more socially conventional perspective. More broadly, it may refer to the cultural appropriation of any subversive symbols or ideas by mainstream culture. https://www.wikiwand.com/en/Recuperation_(politics) https://www.wikiwand.com/en/Recuperation_(politics)
overtonwhy 5y ago
Bitcoin is built on a house of Tether. https://www.coindesk.com/tether-first-reserve-composition-report-usdt https://www.coindesk.com/tether-first-reserve-composition-re...
lamontcg 5y ago
Cannabis isn't a distributed ponzi scheme.
kelnos 5y ago
I'm confused about your position on this, though: the amendment in question ensures certain cryptocurrency-related activities won't be taxed. I agree that we shouldn't be banning this sort of thing, but if people want to throw electricity at it in ways that I consider a huge waste of resources, I'd really like to see that taxed better. And not in a regressive way that makes every electricity user pay more. > Obviously HN community is down on crypto. I don't really think that's true, and please remember that the HN community is not homogeneous, and various people have very different (and strong) opinions on many things. I'm personally not a fan of cryptocurrency (I think it's a waste of time and effort, and to top it off it's currently an environmental disaster), but the top comments on this article are relatively positive right now. I believe @dang has mentioned often that early comments on most articles end up being pretty negative, because the early posts will be more knee-jerk (which tends to bring out the worst reactions in people). Only after people have time to read and cool down will posts be more measured. This article was only posted an hour ago (at the time I'm writing this), so no surprise there's a lot of negativity here.
- saalweachter 5y ago
  > ... please remember that the HN community is not homogeneous, and various people have very different (and strong) opinions on many things. Honestly I'm not sure I consider HN a "community" in the same way I consider other online ... communities, communities. With notably rare exceptions you don't have a lot of sharing of personal milestones, and while you might occasionally "recognize" a poster (and we have a few "famous" ones) it's much easier to deal with each comment as a stand-alone statement without any provenance. Even meta-discussion about the nature of HN like this seems a bit gauche and is discouraged.
- macawfish 5y ago
  No no no, the amendment doesn't say that those activities can't be taxed, it clarifies that there won't be KYC requirements on people who literally can't comply with them. The issue here isn't about what activities should be taxed, it's about overly broad KYC reporting requirements. Pretend the original provision was about ATMs... the language could be used to argue that armored truck drivers should be required to collect personal information and transaction data for every user of every ATM they deliver cash to. Obviously that's not really possible and would be a huge privacy issue. The risk people are seeing here is that the current language could be abused to make ATMs illegal altogether, since nobody would want to risk getting in trouble during the process of stocking them.
hncurious 5y ago
"Cannabis is a good proxy, states can keep it illegal and not make tax revenue or they can legalize it, control it and tax it." That should be a great proxy, but regulators have so overburdened legal dispensaries that they need to be bailed out. Illegal sources could have been easily been made extinct or at least sidelined, but are still able to thrive because the overhead to get a license and stay licensed is so immense. https://www.latimes.com/california/story/2021-06-14/california-struggling-marijuana-industry-cash-grants-budget https://www.latimes.com/california/story/2021-06-14/californ...
- dmix 5y ago
  Here in Canada there's a ton of shops that look like normal dispensaries but are just unlicensed ones. Their product selection is usually way better and includes co2 extracted vape products (which last I checked weren't legally available yet and IMO the future of weed consumption) and candy/drinks/etc. They also have better websites which cheap same-day delivery, usually within a few hours. The municipal governments try to shut them down with daily fines but they either eat the cost because it's so lucrative or shut down temporarily and pop up somewhere else. At least one shop had large bricks put in front of them at multiple locations and they just put someone outside with a square tablet and sold it there. https://globalnews.ca/news/5369230/cement-blocks-illegal-marijuana-dispensaries/ https://globalnews.ca/news/5369230/cement-blocks-illegal-mar... I highly doubt the underground/grey markets will go away.

Guest42 5y ago

Sidetopic, but I am rather disappointed that Venmo has been pressuring me via email to embrace crypto and imagine behind the scenes they own however much, trades only get executed internally, and they do their best to extract transaction fees. To me this is the antithesis of what the crypto community was looking to stand for in terms of privacy and independence from traditional banking systems.

toomuchtodo 5y ago
Venmo is pushing crypto hard because Instant Payments are coming down the pipeline from the Fed in the next 18 months (already in beta testing with a handful of smaller banks, they're ahead of schedule based on my reading of the roadmap), and that kills Venmo (and Paypal to a lesser extend) if they don't have something to pivot to. That's what you're seeing Visa, Paypal, and others attempt to go upmarket (business payments) or branch out (crypto, Plaid acq attempt).
- Guest42 5y ago
  Interesting, I’ll have to research that. It seems like something that would take a long time to deploy.
  - toomuchtodo 5y ago
    It's been in the works for years. https://www.pymnts.com/news/faster-payments/2021/five-banks-test-fednow-real-time-payments-system/ https://www.pymnts.com/news/faster-payments/2021/five-banks-... https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federal-reserves-planned-instant-payments-service/ https://corpgov.law.harvard.edu/2020/08/31/fednow-the-federa...
    - deleted 5y ago
      [deleted]
    - spinax 5y ago
      Thanks for sharing, I as well didn't know about this. I've enrolled/used Zelle (via my bank app) and it's just a travesty of usability to me, after awhile I ditched it (and I don't hear a lot in the news about Zelle these days). What's your hot take on this new FedNow system vs. what Zelle tries to achieve via ACH? Do you think it'll be more "Venmo-like" (low friction) or will it end up a usability mess due to regulation requirements?

drcode 5y ago

It seems rather unprecedented that there are currently US citizens who are billionaires because of their crypto holdings, without the government having any insight into precisely who these people are. It seems like eventually the government is going to push for more onerous reporting laws to return to the usual equilibrium, where the government has at least some basic idea regarding who owns what (which I think they currently have, even for offshore bank accounts) (not that I in any way support more aggressive reporting laws)

PragmaticPulp 5y ago
> It seems rather unprecedented that there are currently US citizens who are billionaires because of their crypto holdings, Perhaps, but it’s not as common as it sounds. Maybe there are people out there who invested $33,000 into Bitcoin when it was $1 and then didn’t sell a single penny as it rose and crashed multiple times, but the number of people achieving billionaire status without starting out with tens of millions invested is going to be quite small. Also, once you pass a specific threshold of wealth it doesn’t pay to flout the rules and risk increasing consequences. Famous and wealthy people have gone to prison for tax evasion in the range of millions of dollars. Trying to dodge taxes to remain a billionaire instead of paying the relatively small capital gains taxes wouldn’t be a rational move. Anyone sitting on huge amounts of crypto worth has likely hired teams of lawyers to cross every t and dot every i to stay in full compliance rather than put their windfall at risk for some irrelevant level of taxation.
- drcode 5y ago
  Agree with all of this, except that I don't think these folks are currently reporting their holdings, as there is currently no requirement to do this.
- TigeriusKirk 5y ago
  There aren't a huge number of crypto billionaires (though your calculations miss those who rode other crypto waves with their bitcoin profits), but there are a decent number of people in the upper 10-figure lower 11 figure range. Outside of Satoshi, the number of those people who are anonymous at a governmental level has got to be quite small.

ilaksh 5y ago

I have heard that they are aiming to make an exception for Bitcoin only but try to stop everything else. That would be a really horrible outcome because Bitcoin is by far the most outdated and least useful cryptocurrency.

vmception 5y ago
nobody is trying to make an exception for just bitcoin, they are trying to fix it for the whole class of crypto and broader digital payments
- nootropicat 5y ago
  The new amendment does exactly that. He had good info. https://www.coindesk.com/senator-who-wrote-controversial-crypto-tax-rule-proposes-modest-revision https://www.coindesk.com/senator-who-wrote-controversial-cry... Really evil to explicitly promote proof of work.
  - vmception 5y ago
    Dogecoin is proof of work, so is Litecoin, and Monero, and Ethereum Classic and.... still should be more inclusive to validators, delegates, stakers and others, thats a separate discussion

runawaybottle 5y ago

The finance industry will never say no to yet another financial instrument. These people will trade anything if you leave it up to them.

danielvf 5y ago

Finally found the text of the amendment: https://www.finance.senate.gov/imo/media/doc/Wyden%20Lummis%20Toomey%20Crypto%20Amendment.pdf https://www.finance.senate.gov/imo/media/doc/Wyden%20Lummis%... The amendment is short and explicitly notes that that the following categories do not count as brokers: (A) validating distributed ledger transactions (B) selling hardware or software for which the sole function is to permit a person to control private keys which are used for accessing digital assets on a distributed ledger, or (C) developing digital assets or their cor- responding protocols for use by other persons, provided that such other persons are not cus- tomers of the person developing such assets or protocols.

Tepix 5y ago
I guess we need a proper CO2 tax to encourage better technology than proof of work
- sputknick 5y ago
  ETH PoS mainnet transition is underway and will be completed early 2022. With this holders of ETH will be able to earn fees from transactions, just by running an application on their standard normal computer. The only encouragement you need to move off of POW is profit motive.
  - whichquestion 5y ago
    Hasn’t PoS been something “in the works” for ETH for something like 6 years now[1]? I don’t think anything guarantees its delivery in early 2022, it all seems like hopeful speculation until they deliver something. [1] This stackexchange question dates back to 2016, the earliest evidence I could find of ETH proposing PoS. https://ethereum.stackexchange.com/questions/9/why-does-ethereum-plan-to-move-to-proof-of-stake/75 https://ethereum.stackexchange.com/questions/9/why-does-ethe...
    - tornato7 5y ago
      This time it's very different. There are billions of dollars of ETH locked up in the staking contract, and proof of stake has been live and operating on the beacon chain for many months.

backprop1993 5y ago

They want to exempt miners who are making Bitcoin from paying taxes on it? Why? They are making revenue from this activity. Of course they should pay taxes on that revenue. This makes no sense at all.

uncomputation 5y ago
Did you read the article? This is just about exempting non-exchanges from “broker” status i.e. keeping track of users’ personal information, transaction history, and data. The representatives said they agree people not paying taxes on crypto is a problem, but classifying them as brokers is not the solution.
- skybrian 5y ago
  Why isn’t it part of the solution? It seems like keeping track of who buys mining equipment (at least at large scale) would be a pretty important component in making sure that they pay taxes? Just like it’s important that brokerages report your stock transactions to the IRS.
  - freeone3000 5y ago
    This is not what broker requirements are. If you are under broker requirements, and you wish to mine a new block, you must have, for every transaction you include in the block, the legal name of the person whose transaction it is, their address, and whether they are a politically compromised individual (ex, a general or politician of a nation that is not the US). For every transaction you're going to include in the block. This information is reasonable to expect from brokerages and exchanges, but not from miners, who are merely transaction processors.
    - RandomLensman 5y ago
      Payment facilitators and processor would normally fall under some sort of KYC regime, I think (let's say when onboarding a merchant). Arguably, there isn't really a one-to-one correspondence with a miner, but to completely exempt miners here is an interesting twist.

mola 5y ago

This means that people with deep pockets, with money which came from who knows where and was laundered through Bitcoin, just bought the US Senate.

flyingfences 5y ago
No, it just means that there are three people in the Senate who recognize that labelling wallet devs -- or anyone other than actual exchanges -- as "brokers" is impractical and serves no purpose.

jnwatson 5y ago

What counts here as a digital asset? World of Warcraft coins? Steam collectible cards?

robot_no_419 5y ago
Yes, those are all digital assets. It's a much broader class of assets than just virtual currencies (ie, cryptocurrencies) that includes photos, electronic records, and pretty much everything that's electronically stored and can be owned by a person. It's also not really a legally defined term, so there are bound to be different definitions and interpretations. I got my definition from https://www.americanbar.org/content/dam/aba/administrative/business_law/buslaw/committees/CL620000pub/digital_assets.pdf https://www.americanbar.org/content/dam/aba/administrative/b... See also the wiki, which provides a similar definition: https://en.wikipedia.org/wiki/Digital_asset https://en.wikipedia.org/wiki/Digital_asset
RandomLensman 5y ago
Sounds like it is a defined term: https://www.rpc.senate.gov/legislative-notices/hr-3684_infrastructure-investment-and-jobs-act https://www.rpc.senate.gov/legislative-notices/hr-3684_infra...
- jnwatson 5y ago
  Good source. "Additionally, the provision clarifies that the definition of specified security includes a digital asset, which is defined as any digital representation of value that is recorded on a cryptographically secured distributed ledger or any similar technology." That means that WoW coins don't count (but NFTs do).

animal_spirits 5y ago

> That means that the IRS will not be able to require that miners, stakers and companies that sell hardware or software for storing digital assets report the activities of their customers or crypto users whose transactions they verify. > In a statement, Wyden said that “investors failing to pay tax they owe through cryptocurrency is a real problem,” but that the law as previously written was too broad and would have applied to actors who would not have been able to fulfill its mandates. > The changes will lead to the bill raising $5.2 billion less than the $28 billion envisaged by the initial legislation, according to a Politico report citing the Joint Committee on Taxation. To me, a layman, it seems that they are trying to allow more loopholes for tax evasion through buying and selling bitcoin in certain ways? Or am I completely off base? EDIT: Here [0] is the actual ammendment, so it seems maybe it's just protecting people doing development work on cryptocurrency software/hardware from having to pay taxes.. I think [0] https://news.ycombinator.com/item?id=28075226 https://news.ycombinator.com/item?id=28075226

meowkit 5y ago
You’re off base. The original definition was putting tax and KYC requirements on people who don’t have, and can’t get, that information. Network nodes facilitate transactions, they don’t broker them. Its like treating an exchanges electricity provider as part of the equity trade. It’s not tax evasion. The law as originally stated would have crippled the industry in the US.
- animal_spirits 5y ago
  Interesting, thank you
- arcticfox 5y ago
  I rarely notice politicians, but Wyden is frequently in the fray on the right side of a lot of issues I hear about. Seems like he got this one right, again.
- deegles 5y ago
  Devil's advocate for a moment... the definition of a broker is "a person who buys and sells goods or assets for others," or it can mean to "arrange or negotiate" a deal or plan. How is a miner not a broker then? They accept transactions and then place them on a blockchain by performing some kind of work. Sure, at the moment few if any cryptos are definitely securities, but what is going to happen when a company creates (for example) a wrapped SP500 token? A "traditional" broker can't just trust anyone to record a transaction, there is a lot of regulation. Will there be a class of tokens that can only be mined by people who can do KYC on them? Why is a miner exempt from caring about what transactions they accept?

purple_ferret 5y ago

> The changes will lead to the bill raising $5.2 billion less than the $28 billion envisaged by the initial legislation, according to a Politico report citing the Joint Committee on Taxation. How do they come to this conclusion since taxes are still owed? Just that they expect about 5 billion in tax evasion from this?

tedunangst 5y ago
They're all made up numbers that exist only to get the bill passed.

jb775 5y ago

In other words, crypto miners are investing in lobbyists.

memming 5y ago
Or lobbyists are investing in crypto.

nyghtly 5y ago

This headline might as well be click bait. It's important to remember that this is a proposed amendment. It won't pass unless the infrastructure gang supports it. And it's very unlikely that they will support it, because that would mean that the bill isn't fully funded. Not being funded would kill the bill, because the Republicans who support it are demanding full funding. https://www.politico.com/news/2021/08/03/senate-bipartisan-infrastructure-deal-502267 https://www.politico.com/news/2021/08/03/senate-bipartisan-i...