In recent weeks, the cryptocurrency clause in the bill has shocked the US crypto community; with crypto lobbyists struggling to change it, and crypto investors, industry experts and technologists harshly deriding it.
After its adoption by the US Senate, new, more stringent requirements for crypto companies and their reporting came into force. Also, one of the points of the document suggests that taxable brokers should henceforth include crypto companies, miners, blockchain validators and software developers. According to American officials, in the next 10 years this will attract an additional $ 28 billion to the budget. However, the players in the crypto industry are confident that this step can nullify the development of the entire crypto sector.
Crypto industry players are unhappy
American software architect and creator of Twitter and Square platforms; Jack Dorsey spoke about the taxation of cryptocurrencies in the United States:
“Enforcing reporting rules for Americans who develop software and hardware, mine and secure the network; or manage nodes to improve resilience and efficiency; is an impossible task that will only drive the development and use of this critical technology for outside the United States”.
The well-known investor, billionaire Mark Cuban also managed to comment on this event.
The man is known for his loyalty to digital assets and also believes that crypto innovations in the United States will bring a lot of problems to the industry.
In addition, Cuban reacted to a sharp halt in price growth in the market.
“The current situation on the market is very much like 1995. Back then, people also did not believe in the effectiveness of using credit cards and were wary of various websites. Now, against the background of various innovations, they are also afraid to use crypto. This is temporary”, the investor noted.
Charles Hoskinson, founder of Cardano and co-founder of Ethereum; urged crypto users to resist the proposed bill and write to senators and congressmen from their states and districts, demanding the elimination of the expanded definition of a broker.
The head of the US Treasury, Janet Yellen, on the other hand, supports tightening regulation of the crypto sector. She met with senators and asked them not to relax their demands on the industry.
The bill will hinder the spread of cryptocurrencies in the United States
The passage of the bill in its current form will hold back the development of the sector and prevent the massive spread of cryptocurrencies in the United States.
The inability for miners and validators to receive data to fill out the 1099 form could mean a de facto ban on mining in the United States. US miners and validators will have much stricter tax reporting requirements and may even have to comply with KYC requirements. All this will increase their costs.
At the same time, the lack of legislative clarity – who exactly falls under the definition of a broker; will negatively affect the opening of new projects. For example, decentralized crypto-exchanges and P2P platforms may well fall under the definition of a broker.
Some of the players will be forced to change their jurisdiction. As a result, the United States will lose its share of the mining market. This can lead to a drop in the hash rate and network complexity; which will have a short-term negative impact on the price of MTC. Earlier, we discussed in detail how the difficulty and hashrate of Bitcoin affects the price of a coin.
As a result of the migration of players from the United States, the country will not only not acquire the required $ 28 billion in taxes; but, on the contrary, will lose many times more.