BitcoinWorld

Blockchain News

New House Financial Services Committee Chair Wants to Delay Crypto Tax Changes

In a letter to the Treasury, Republican Representative Patrick McHenry asked for clarification on a “poorly” written digital asset tax provision.

Patrick McHenry, the incoming chair of the United States House Financial Services Committee, has asked the Treasury to postpone the implementation of a section of the Infrastructure Investment and Jobs Act dealing with digital assets and tax collection.

McHenry wrote to U.S. Treasury Secretary Janet Yellen on December 14 with questions and concerns about the scope of Section 80603 of the Act. In the letter, he asked for clarification on the “poorly drafted” and potentially privacy-invading Section dealing with the taxation of digital assets, which is set to take effect in 2023.

He claimed that the section requires the government to tax digital assets as if they were cash, which could “endanger” Americans’ privacy and have a negative impact on innovation.

The section, titled “Information Reporting for Brokers and Digital Assets,” requires brokers to report to the Internal Revenue Service certain information related to dealing with digital assets (IRS).

McHenry claims the section was poorly written and that the term “brokers” could be “wrongly interpreted” to apply to a broader range of people and businesses than intended.

A provision in the Act requires individuals or entities engaged in a trade or business to report to the IRS any digital asset transactions exceeding $10,000.

The requirement was challenged earlier this year by Coin Center, a non-profit advocacy group focused on blockchain technology, which filed a lawsuit against the Treasury alleging that the rule would impose a “mass surveillance” regime on American citizens.

According to the Fordham International Law Journal, the section is likely to impose reporting requirements on major cryptocurrency exchanges that already have customer data such as names, addresses, and social security numbers.

McHenry acknowledged that the Treasury Department’s statement that “ancillary parties” should not be subject to the same reporting requirements as brokers was a positive step forward.

In February, US Senator Rob Portman shared a letter from US Assistant Secretary for Legislative Affairs Jonathan Davies on Twitter, clarifying that crypto miners and stakers are not subject to the new legislation.

McHenry’s letter ended by requesting that the Treasury “immediately” publish the section’s rules and postpone their effective date to allow “market participants” time to comply with any new requirements.

It’s McHenry’s second letter to Yellen this year, following a letter on Jan. 26 urging the Treasury Secretary to clarify the definition of a broker.

Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Crypto is not a legal tender and is subject to market risks. Readers are advised to seek expert advice and read offer document(s) along with related important literature on the subject carefully before making any kind of investment whatsoever. Crypto market predictions are speculative and any investment made shall be at the sole cost and risk of the readers.