Patrick McHenry, Chairman of the House Financial Services Committee, commented on newly proposed crypto taxation rules on Aug. 25.
The IRS, along with the U.S. Treasury, proposed those taxation rules earlier in the day. The new rules would broadly require crypto brokers to report the same tax information that brokers for securities and other financial instruments currently do.
McHenry has criticized the proposed requirements as overbroad, writing:
“The notice … is another front in the Biden Administration’s ongoing attack on the digital asset ecosystem. … Numerous lawmakers of both parties [have] made clear that any proposed rule must be narrow, tailored, and clear.”
McHenry said the Infrastructure Investment and Jobs Act, introduced by the Biden administration in 2021, requires such clarity in legislation.
He acknowledged that the proposal is still in the proposal stage, adding that he is pleased to see a delayed effective date and exemptions in the proposal text.
McHenry went on to urge President Joe Biden’s government to “end its effort to kill the digital asset ecosystem” and cooperate with Congress on crypto legislation.
He also promoted his own bipartisan legislation, the Keep Innovation in America Act, as an alternative. That bill would ensure that, for tax reporting purposes, the term “broker” is extended only to companies that broker digital assets. It would exclude cryptocurrency miners, node operators, and hardware operators from the broker category.
Reports from Bloomberg suggest that the IRS and Treasury’s proposal, by contrast, would include DeFi and NFT platforms while excluding companies involved in mining and staking.
McHenry has pro-cryptocurrency reputation
McHenry, a Republican and U.S. Representative for North Carolina, has earned a reputation as a pro-crypto legislator. He has backed various other cryptocurrency-related bills, including the Clarity for Payment Stablecoins Act of 2023, the Digital Tokens Act of 2021, and the Ransomware and Financial Stability Act of 2021.
McHenry has also commented on numerous recent developments in the crypto industry, including PayPal’s decision to introduce a stablecoin and the regulatory response to BlackRock‘s recent spot Bitcoin ETF application.
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Author: Mike Dalton