Bitcoin miners at risk with new US tax plan: “Close it or leave the country”

A new infrastructure bill Joe Biden’s government, unveiled this week, took the crypto market by surprise. That’s because the proposal suggests that all industry players – such as exchanges, developers, miners, custodians and DeFi projects – will respond to stricter tax reporting rules.

The measure caused the fury of major market players and, according to Coindesk, a new version of the project was presented on Thursday night (5) by the original authors, excluding from the scope of the law those who mine cryptocurrencies based on proof of work (PoW).

The problem is that the consensus, despite being used by bitcoin, is gradually being pushed aside by its limitations and high energy consumption. Proof of Participation (PoS) is the protocol behind most DeFi projects and, starting next year, it will also be used by Ethereum, the second largest cryptocurrency in the world.

For the CEO of brokerage FTX, Sam Bankman-Fried, if the law is passed as it is, miners of these currencies will have two alternatives: “Close or leave the United States”.

“To be clear, it’s not just that they *don’t* want to declare people’s taxes. They *can’t* do this because they don’t have any private information. All they’re doing is providing tools and/or propagating the blockchain. They don’t know who is using DEX [exchange descentralizada]”, he explains.

Bankman-Fried also said the senators’ bill will not increase tax collection, and will only “kill the industry” and drive innovation out of the country.

Alternatives

Regarding tax filing for decentralized finance projects, in Sam’s view there are revisions to the bill that would solve the problem.

One of the alternatives is the text presented by a trio of senators who ask that three activities be excluded from the original proposal.

They are: validating distributed ledger transactions; sell hardware or software whose sole function is to allow a person to control private keys; and, finally, developing digital assets or their corresponding protocols for use by others.

The group of senators also calls for miners and software developers to be left out of the bill. According to Decrypt, the vote on Biden’s new infrastructure plan takes place this Saturday (7).