Jack Dorsey joins criticism of US plan for expanded crypto taxation

Jack Dorsey has criticised the plan for expanded cryptocurrency taxation in the United States and proposed his own approach to solving the problem. According to the Twitter chief, the bill as currently drafted runs counter to the development of innovation in the United States.

Forcing reporting rules on Americans who develop software and hardware, who mine and secure the network, or who run nodes to build resilience and efficiencies, is an impossible ask that will only drive development and operation of this critical technology outside the US.

— jack⚡️ (@jack) August 8, 2021

“Imposing reporting rules on Americans who develop software and hardware, mine, secure the network, or run nodes to increase its resilience and efficiency is an impossible task. It will only push the development and operation of this critically important technology outside the United States,” wrote Dorsey.

The billionaire believes that the definition of ‘broker’ in the crypto industry should be narrowed to platforms that exchange digital assets for fiat. The current draft of the bill envisages that any person providing cryptocurrency transfer services and receiving remuneration for it must report to the U.S. Internal Revenue Service about the activity of their users.

If you feel this doesn’t go far enough, I’d argue that this at least gets you to 90% of goal. For the remaining 10% of edge cases, let’s make a proper well-informed law through committee hearings with witnesses on both sides of the debate.

— jack⚡️ (@jack) August 8, 2021

“Broker = fiat-to-crypto exchange,” said the head of Twitter.

Dorsey noted that this formulation would accomplish the task “90%” of the way. In his view, for the “remaining 10% of edge cases” a separate bill could be passed through Senate hearings.

The measure aimed at raising $1 trillion to upgrade the United States’ infrastructure has drawn widespread criticism from participants in the cryptocurrency community. Part of this funding is to be financed through a tougher regime of cryptocurrency taxation.

Industry experts not without reason believe that the tax reporting requirements are unworkable for a number of actors in the digital asset industry.

For example, miners and node operators who validate blocks do not have information about the substance of each transfer. They cannot know whether the transactions are trading deals and who executed them. The bill’s requirements are technically unfeasible for them even if they wished to comply.

Senators Ron Wyden, Cynthia Lummis and Pat Toomey proposed to exempt the specified activities from the bill and not apply broker-related rules to them.

They were supported by one of the bill’s authors, Rob Portman , but he proposed an amendment that would exclude only miners and sellers of equipment or software that allows individuals to control private keys. Under his proposal, the status of PoS validators remains unclear.

Portman was supported by Senators Mark Warner and Kirsten Sinema. Their proposal also drew criticism from the cryptocurrency community. Coinbase CEO Brian Armstrong called these amendments a “disaster”, and Elon Musk agreed.

On August 7, Warner and Sinema unveiled an updated version of the amendment. It now excludes both PoW miners and PoS validators, but does not touch other consensus mechanisms.

Senator @MarkWarner and @SenatorSinema have offered a new amendment with tech neutral language. If cloture is invoked, there will be 30 hours of debate left, then they will vote on the base text. We still don’t have any indication when they are going to vote on amendments. pic.twitter.com/4IpiFkfpud

— Perianne Boring (@PerianneDC) August 7, 2021

The senators were due to approve the final version of the bill, but could not reach an agreement. Debates will continue on Sunday.

Send coffee. https://t.co/MjbIeEW3J6

— Cynthia Lummis 🦬 (@CynthiaMLummis) August 7, 2021

According to The Washington Post, U.S. Treasury Secretary Janet Yellen has personally lobbied provisions unfriendly to the digital assets industry.

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