How the Crypto Community is Reacting to Biden’s Proposed Crypto Tax Reporting Rules

Criticism of US President Joe Biden’s Crypto Tax Reporting Rules

Recently, the Internal Revenue Service (IRS) proposed new rules for brokers to follow when selling and trading digital assets, in order to catch crypto users avoiding taxes. The U.S. Department of the Treasury stated that the proposed rules would make digital asset reporting similar to reporting on other assets.

However, several prominent crypto commentators have voiced their criticism of these new rules, believing that the stringent regulations will push the crypto industry further away from the United States.

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Crypto Industry in the United States

Messari CEO Ryan Selkis and Chris Perkins, president of crypto venture firm CoinFund, both expressed their concerns about the future of the crypto industry in the United States if Biden secures reelection. Selkis believes the industry will not flourish, while Perkins holds the view that other countries have surged ahead of the U.S., and these rules will result in reduced innovation. Perkins suggests that rather than harsh crackdowns, simple and detailed rules allowing safe innovation across the blockchain technology web 3.0 industry are needed.

Meanwhile, others remain skeptical that neither the Democrats nor the Republicans would adequately champion crypto interests in the country, despite the blockchain fundamentals for web 3.0 and the need to build and deploy a modern web 3.0 blockchain app.

The question of whether we are in web 2.0 or 3.0 remains unanswered, but it is clear that the crypto and web 3.0 industry needs clear and concise regulations in order to thrive.

Crypto Regulations and Web 3.0

As the new presidential term brings forth changes to crypto regulations, some users have expressed their concerns over the potential implications. One user said, “I’m not confident that either party would be good for crypto. Though it definitely feels worse now than last presidency.” Another user raised privacy issues in relation to the new rules.

On Aug. 25, the Blockchain Association’s CEO, Kristin Smith, commented on the merging of digital asset reporting with traditional assets. She said, “It’s important to remember that the crypto ecosystem is very different from that of traditional assets, so the rules must be tailored accordingly and not capture ecosystem participants that don’t have a pathway to compliance.”

Joe Biden’s suggestion to impose taxes on crypto mining to decrease mining operations has also been met with some criticism.

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Crypto Industry Voices Concerns Over Regulatory Choices

In March, a budget proposal suggested an “excise tax equal to 30 percent of the costs of electricity used in digital asset mining.” This has caused the crypto industry in the U.S. to voice their worries about how such regulatory choices might impact innovation.

On Aug. 13, Grayscale Investments CEO Michael Sonnenshein warned that if the Securities and Exchange Commission continues to rely on enforcement action, it could drive blockchain and web 3.0 companies out of the country. He said, “If every crypto issue needs to go to a court of law, then as a country, we are squashing the innovation taking place here.”

In the same vein, Ripple CEO Brad Garlinghouse recently noted that the crypto industry is migrating away from the U.S. due to its slower crypto regulation process, in comparison to countries like Australia, the United Kingdom, Singapore, and others that are further along the blockchain and web 3.0 course.