Senator Ted Cruz is looking to repeal the effect of legislation passed in the new tax infrastructure bill that defines crypto brokers very broadly.
Following President Joe Biden’s signing of a $1.2T bipartisan infrastructure bill, Senator Ted Cruz of Texas introduced legislation to repeal the bill’s effect on the cryptocurrency industry, which has found a friendly operating environment in Texas. Senator Cruz is of the opinion that the new bill is too broad and poorly crafted, and that it will stifle innovation and endanger the privacy of Americans. Cruz believes that the Senate should have held hearings to understand the consequences of the new bill before its signing. Senator Cruz wishes to change the language in the bill that defines what or who a “broker” is.
The new bill requires crypto exchanges to issue a 1099-B, by defining them as “brokers”. The 1099-B form is used by brokerages to keep track of customers’ gains and losses during a tax year. The taxpayers will receive the 1099-B form from the brokerage, copy the information to Form 8949 to determine gains and losses, which is then entered into Schedule D of their tax return. Under the new bill, many crypto entities would be considered as financial institutions, which means that certain types of information about customers would need to be collected.
Cruz’ view on Texas as a crypto hub
Cruz believes that crypto is a new and exciting industry in the United States, which is creating jobs and new inflation hedges. According to a statement made by Cruz in August 2021, he believes that due to the average annual income of $136000 for blockchain developers, the industry helps people to own a home and raise a family. During the Texas Blockchain Summit in Oct 2021, Sen. Cruz supported the idea of using flared natural gas for generators that miners could use.
Sen. Toomey on crypto’s side
Senator Pat Toomey of Pennsylvania and other senators have worked alongside the Biden administration to try and narrow the definition of the “broker,” discussions which never saw the light of day, due to a “procedural problem”. The term “broker” as it stands, can refer to miners, network validators, and other service providers. Since miners or validators get rewarded for validating transactions on a network, they never take control of assets, and have no access to personal information, according to Toomey. Senator Cynthia Lummis of Wyoming has been a supporter of bitcoin, and was one of the senators working with Senator Toomey.
Biden’s sweeping bill could put a damper on Miami’s Mayor Suarez’s efforts at making bitcoin more mainstream in his city. The new Mayor-elect of New York City, who has shown signs of being a bitcoin maximalist, will no doubt be paying attention to the new bill, following multiple bullish statements made in the press recently, and the creation of the NYCCoin.
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