The Senate has decided to not amend the crypto tax bill, but will vote on its own version of the bill. We have seen this play out multiple times in the last month as senators have tried to remove or change sections of the bill, only to be defeated each time. Now, the Senate is set to vote on the first version of the bill.
The Senate Bill “The Cryptocurrency Tax Fairness Act” was written by one of the leading Senators in the Cryptocurrency space, Senator Chuck Schumer (D-NY). The bill was originally passed by the Senate in May, but the House wanted to add new provisions that addressed a few issues.
After months of negotiations and fierce lobbying from various groups to amend this bill, the US Senate has finally voted to move forward with the Tax Cuts and Jobs Act today, the final vote to be held Tuesday. The bill is now on its way to the House of Representatives, which is expected to vote on the bill sometime this week.
The crypto sector in the United States is set to undergo a significant transformation, as Senate discussions on the contentious crypto tax bill concluded with a resolution not to alter the original measure. Instead of making any changes, the Senate will just bring it up for another vote, with the same probable outcome.
The bill’s aim, as some may recall, is to generate approximately $28 billion for infrastructure investment through increasing crypto taxes. Any crypto business that might be classified as a broker will be required by law to disclose its users’ crypto profits.
Jake Chervinsky, the general counsel for Compound Finance, tweeted the Senate’s voting process earlier today, confirming that the bill would not be amended. The measure received 68 votes in favor and 29 votes against in the Senate. There will be no more discussion about what may or will happen in this manner. On Tuesday, August 10th, the final vote will be held.
What exactly is the issue?
Interestingly enough, the Senate’s debate regarding the crypto tax bill has stalled quite a bit, only for the final version of the bill to be completely unamended. The issue with the bill is that the language it is using to describe what a broker is is rather broad. The issue has sent major shockwaves throughout the industry, as analysts pointed out that many entities, such as miners, stakers, network validators, software developers, and others can all be affected by it.
Analysts contend that, while not having personal information about their counter-parties, these people may be subject to third-party tax reporting obligations.
Senators Rob Wyden, Pat Toomey, and Cynthia Lummis, among others, noticed the issue and offered an amendment to restrict the wording and properly clarify key terms in the crypto sector. This would enable the law to focus on the organizations that it should, rather than leaving the door open for those who aren’t supposed to be considered brokers.
The Senators essentially demanded that crypto miners, validators, and software developers be removed from the measure. Unfortunately, the bulk of their colleagues, including Mark Warner, Rob Portman, and Kyrsten Sinema, have chosen to support a rival amendment proposed by three others. Only miners, PoS validators, and wallet providers would be excluded.
The Senate is divided.
Lummis tweeted on August 8th that both parties had reached a stalemate and that the break would last 30 hours. This is the period during which senators must examine the measure before voting on it.
However, according to Lummis, some senators would prefer to spend the next 30 hours working on the bill’s infrastructure. As Senate Majority Leader Chuck Schumer said, focusing on the measure in this manner would only increase awareness about its cost. Schumer, on the other side, wants to get the vote over with as soon as possible so that he can move on to the next piece of legislation.
Nonetheless, Lummis said that if senators were given the opportunity to vote on the changes, the crypto community would likely be pleased with the result.
Now we’ll have to wait and see what the Senate decides tomorrow, and how that will affect the crypto industry. Even if the bill were to pass tomorrow, it would still be unconstitutional. According to the process that any measure must follow, it must first pass through the House of Representatives before becoming law. This may provide crypto users the chance to get the crypto provisions changed.
Overall, the situation isn’t ideal, but it’s not as terrible as some had predicted. Cryptocurrencies are constantly gaining traction, and the sector is growing more important while simultaneously becoming more regulated.
The crypto tax bill has been amended to provide a negative tax rate for the digital currency miners. However, this version of the bill has some major drawbacks. The tax rate for miners has been lowered from 30% to 10%, which is considerably smaller than the existing rate of 70%. The new bill also does not include a tax on the digital currency miners. The bill keeps the current 10% capital gains tax rate for digital currency miners, which is significantly less than the 70% capital gains tax rate for other digital currency investors. The bill also provides that a digital currency miner is not a taxpayer if he or she mines less than 500,000 digital currency.. Read more about crypto bill vote result and let us know what you think.
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