- U.S. lawmakers, led by Chairman Patrick McHenry and Congressman Ritchie Torres, are urging the Treasury to revise its proposed crypto taxation rules, deeming them an overreach.
- The group of nine lawmakers highlights issues with the broad definition of ‘Broker’ and the short comment period, fearing the regulation could hinder the digital asset ecosystem in the U.S.
A Call for Change in Crypto Taxation
In a significant bipartisan move, a group of U.S. lawmakers has called on the Treasury Department to revise its recently proposed regulations on the taxation of digital assets. This request comes amid growing concerns within the crypto community and legal experts over the implications of the proposed rules.
Lawmakers Lead the Charge
The initiative, spearheaded by Patrick McHenry, Chairman of the House Financial Services Committee, and Congressman Ritchie Torres, includes a group of nine lawmakers. They argue that the tax reporting requirement proposed by the Treasury is “unworkable” and could pose a serious threat to the viability of the digital asset sector in the United States.
Concerns Over Broad Definitions and Short Comment Period
In their Nov. 10 letter to the Treasury’s Assistant Secretary, Lily Batchelder, the lawmakers expressed their concerns about the overly broad definition of a ‘Broker’ in the context of digital assets. They also highlighted the inadequacy of the proposed definition of a ‘Digital Asset.’ Another point of contention was the unreasonably short comment period for public feedback on the proposal, which they believe could prevent a comprehensive understanding of the regulation’s impact.
Industry’s Reaction and Potential Revisions
The crypto tax rule, proposed in August, concluded its public comment period recently after garnering over 124,000 comments. During a recent audio-only hearing, officials’ questions to industry representatives indicated that the tax proposal might be “open for revision.” However, a final version is still months away and is expected to address some of the industry’s critical concerns.
The Controversy Over ‘Broker’ Definition
A primary concern for the lawmakers and the crypto community is the proposed regulation’s definition of ‘Broker.’ As it currently stands, this definition is considered too broad and could encompass entities like hosted wallet providers, payment processors, and some decentralized finance (DeFi) organizations. The lawmakers argue that this definition could capture entities that do not fit the traditional characteristics of a broker.
In Conclusion
The bipartisan effort by U.S. lawmakers to urge the Treasury for a revision of the proposed crypto taxation rules reflects the growing need for regulation that understands and accommodates the unique attributes of digital assets. As the Treasury considers these revisions, the outcome could significantly influence the future landscape of the digital asset ecosystem in the United States.
