Not the Time to Pick Winners or Losers in Crypto Tech, says Tesla CEO as Treasury Crusades Against the Industry
The controversial bipartisan infrastructure bill with its crypto tax provision gained new supporters in the form of Tesla CEO Elon Musk, who tweeted early on Saturday,
“This is not the time to pick technology winners or losers in cryptocurrency technology. There is no crisis that compels hasty legislation.”
This support came in response to cryptocurrency exchange Coinbase co-founder and CEO Brian Armstrong discussing the competing amendment proposed by Mark Warner and Rob Portman and calling it “disastrous” because it supports one foundational technology over the other.
The fact the crypto industry has forced a delay on arguably the largest policy priority of the Administration (outside of COVID) is a testament to the strong lobbying forces in play. We are working together and to say we haven't slept much in the past week is an understatement…
— Ron Hammond (@RonwHammond) August 6, 2021
White House actually came in support of the Warner-Portman amendment as we reported, and according to a WSJ report, Treasury Secretary Janet Yellen has spoken to lawmakers to raise objections to the effort led by Senate Finance Committee Chairman Ron Wyden along with Cynthia Lummis and Pat Toomey, which the crypto community supports.
“Word in DC is that this whole thing was Treasury's idea. They don't like what we're building & their solution is to obtain jurisdiction over non-custodial actors. They tried this via FinCEN's proposed rule last year & failed. Now they're trying again,” said Jake Chervinsky, general counsel at Compound Finance.
Senator Toomey also spoke against Treasury's attempt to gain maximum flexibility to regulate and tax crypto as they see fit, which he urged Congress shouldn’t allow to happen.
“Good policy apparently isn't the priority here. Instead, this looks like a continuation of the US Treasury Department's embrace of warrantless surveillance & crusade against financial privacy in crypto,” said Chervinksy.
Now isn’t the time for the IRS to pick winners and losers with a new technology.
Crypto has the potential to be the future of the internet.
How foolish to crush it over a tax provision that possibly raises just $500 million per year more in a $1.2 TRILLION bill.
— Senator Pat Toomey (@SenToomey) August 6, 2021
The Portman-Warner amendment only protects proof-of-work (PoW) miners and some wallet projects but excludes the likes of Lightning node operators, software developers, PoS validators, DeFi aggregators, DEX liquidity providers, and many other non-custodial actors who can't comply with the law.
“This is the government trying to pick winners and losers in a nascent industry today, where some new technology is being developed every month. They are guaranteed to get it wrong, by writing in a few exceptions by hand today,” said Coinbase CEO.
According to Armstrong, the Warner-Portman amendment will only result in driving the future development of blockchain technology offshore at a time when crypto is still in its early stages.
Innovators in the US are working to make crypto networks better, which will bring enormous benefits to Americans and help ensure its place as a financial hub, he said, added: While everyone must pay their taxes that can’t be ensured by destroying the innovations in the process.
A big part of the challenge of explaining this stuff in the Senate is making clear that this isn’t some niche, fringe issue but a HUGE component of the US 🇺🇸 (and international) financial future. Your voices are making clear that financial innovation is a defining issue. https://t.co/90Wy6Xs0PP
— Cynthia Lummis 🦬 (@CynthiaMLummis) August 6, 2021
“We can all agree that centralized exchanges should be subject to the reporting requirement included in this bill, just like brokers would be subject to report other assets. But why rush and get it wrong?” said Toomey.
The Senate has the opportunity to set the stage for successful implementation of digital assets into our financial system, but we have to get it right here, and we have the perfect opportunity. Let’s get ‘er done.
— Senator Cynthia Lummis (@SenLummis) August 8, 2021