Coinbase Chief Executive Officer (CEO) Brian Armstrong lashed out at the cryptocurrency tax bill on Friday. In that sense, the representative of one of the exchanges most important cities in the world, called the proposal “hasty.” Likewise, he considered that it becomes a threat that could take digital innovation out of the United States.
In a thread on his twitter account, Armstrong made harsh remarks to the bill. He assured that it could have a profoundly negative impact on cryptocurrencies in the US It would be a case, he explained, in which hasty measures expel technological innovations out of the country.
Among other aspects that this bill brings, is that the brokers and investors, must report all the transactions they carry out. In this way, it considers that the non-differentiation or ambiguity when establishing what a brokermakes the tax proposal “meaningless.”
Why did the Coinbase CEO lash out at the bill?
The way the Coinbase CEO lashed out at the cryptocurrency tax bill, highlights the dangers it can bring. Armstrong assures that the problem with the proposal is not paying taxes. His firm, he explains, works hard so that its clients fulfill their obligations to the Internal Revenue Service (IRS).
He considers that the problematic issue is that the proposal qualifies as broker «to anyone who carries out a transaction with digital assets». This fact translates, he continues, in that everyone who participates in the crypto system will receive that treatment. In other words, with the immense reporting obligations that this implies. In the same basket, they would be placed «lminers, validators, smart contract signers, open source developers, etc.“Laments Armstrong.
This is nonsense. Smart contracts, for example, are not companies. They cannot be modified in such a way that they can collect KYC information or issue 1099s. They are simply software that runs on the Blockchain and that anyone can use ”, Explain.
When Armstrong talks about “issuing 1099s,” he is referring to various types of IRS tax-related return information documents. For this reason, the CEO of Coinbase lashed out, calling this attempt to impose KYC and 1099 on a smart contract as “nonsense.”
Congress divided over the bill
One aspect to take into consideration in the midst of this matter is that some congressmen agree with the CEO of Coinbase. Consequently, it can be said that Congress is divided regarding the approval of this bill.
In this latest scenario of legislative division, Senators Ron Wyden (Democrat) and Republicans, Pat Toomey and Cynthia Lummis, presented an amendment proposal. It aims to clarify the term broker in the original proposal. This proposal stipulates that «only people who transact on an exchange where digital assets are bought, traded and sold ”, they must file with the IRS.
However, another alternative amendment was submitted by Democratic Senators Mark Warner and Kyrsten Sinema in conjunction with Republican Rob Portman. This proposal forces to pay taxes to the validators and developers based on the protocol Proof-of-Stake (PoS).
It is a sharp division between the representatives of both parties. Coinbase CEO Brian Armstrong wasted no time lashing out at Warner’s proposed amendment. He considered that it, despite the fact that it excludes miners and validators of other protocols than PoS, is an attack against innovation.
Ethereum and similar projects under threat with the Warner proposal
It should be noted that the second amendment proposal to the cryptocurrency tax law received the support of the White House. Thus, it should be borne in mind that the government of Joseph Biden wants to carry out a large-scale infrastructure plan. With it, they seek to repair bridges, roads, etc. Carrying it out requires $ 1 trillion.
For this, the tax plan is designed in an aggressive way and cryptocurrencies are part of it. In this way, the aforementioned bill seeks to extract about $ 28 billion in taxes from the crypto sector, according to Financial times.
Hence, he wants to cover as much as possible with the bill. Although it is difficult for the original project to pass, the administration shows its support for the second amendment proposal. However, it can bring great difficulties to decentralized projects such as Ethereum and others.
Faced with this, the Coinbase CEO was emphatic and lashed out at the direction that seeks to give the proposal Warner’s amendment. He called it an attempt to impose draconian taxes on a technology sector that could easily choose to leave the country.
Similarly, Andreessen Horowitz said that the Warner Amendment represents a staggering loss for the United States. «The ability to remain the epicenter of innovation in the world is lost», He pointed out. It ruled that the amendment «it would stifle innovation here in America. But these decentralized protocols will continue to be built, scaled, and evolved by teams around the world.».