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Elon Musk, Jack Dorsey, and Ted Cruz are among those criticizing planned crypto tax rules, which could help fund the infrastructure package

Business Insider logo Business Insider 8/8/2021 kshalvey@insider.com (Kevin Shalvey)
Ted Cruz, Ted Cruz, Ted Cruz are posing for a picture: Sen. Ted Cruz joined other prominent figures in criticising the tax. Samuel Corum/Getty Images © Samuel Corum/Getty Images Sen. Ted Cruz joined other prominent figures in criticising the tax. Samuel Corum/Getty Images
  • Sen. Ted Cruz and Tesla CEO Elon Musk criticized a crypto tax in the Senate's infrastructure bill.
  • Elon Musk called the legislation hasty, while Cruz said it was dangerous.
  • The planned amendments would be a "stunning loss," an Andreessen Horowitz spokesperson told Insider.
  • See more stories on Insider's business page.

As a bipartisan Senate moved toward a vote on President Joe Biden's infrastructure package, a chorus of leaders from Silicon Valley and Washington raised concerns about a provision that would add new taxes on crypto.

"The infrastructure deal contains DANGEROUS provisions that would devastate crypto and blockchain innovation," Sen. Ted Cruz said on Saturday.

Tesla CEO Elon Musk called the legislation "hasty," saying now was not the time for lawmakers "to pick technology winners or losers."

A bipartisan Senate bill last week included new tax rules for crypto trading firms and brokers, a move expected to raise about $28 billion in new tax revenue over a decade. The White House said the revenue would help fund President Joe Biden's infrastructure package.

Critics jumped on the idea. They said the tax rules would apply to a larger-than-planned group of crypto companies - some of which wouldn't be able to meet the reporting requirements.

Midweek, three lawmakers - Sens. Ron Wyden, Cynthia Lummis, and Pat Toomey - introduced an amendment that they said would better define the word "broker."

In a statement, Lummis said: "The digital asset and financial technology space is incredibly complicated, and we have spent long hours working in the Senate, with industry stakeholders, and with the administration to find a way to effectively integrate digital assets into our tax code without harming the technology or stifling innovation."

a close up of a coin: Firms with an interest in crypto pushed back against the amendments. Nurphoto © Nurphoto Firms with an interest in crypto pushed back against the amendments. Nurphoto Another amendment was put forward by Sens. Mark Warner, Krysten Sinema, and Rob Portman. Biden's White House said it favored that alternative amendment, which would exclude

Video: Bitcoin Rises Past $32,000 as Musk, Dorsey Discuss Bull Case (Bloomberg)

a smaller group of crypto investors from the new tax rules.

"But we believe that the alternative amendment put forward by Senators Warner, Portman, and Sinema strikes the right balance and makes an important step forward in promoting tax compliance," the White House press secretary Jen Psaki said in a press briefing on Friday.

Firms with an interest in crypto pushed back, saying the amendments didn't go far enough to protect a fledgling industry.

"If the last-minute amendment to the infrastructure bill introduced by Senator Warner passes, it will be a stunning loss for America and our ability to remain the innovation epicenter of the world," a spokesperson for VC firm Andreessen Horowitz said via email.

Toomey said of the alternative amendment: "While I appreciate that my colleagues and the White House have acknowledged their original crypto tax had flaws, the Warner-Portman amendment picks winners and losers based on the type of technology employed. That's horrible for innovation."

"As we have been saying for years, the govt should not be picking winners and losers in crypto (or any technology for that matter,)" Stuart Alderoty, general counsel at Ripple, a crypto firm, said on Twitter.

Twitter and Square CEO Jack Dorsey said the new reporting rules would push innovation out of the US.

"If we can't strike the entire provision so we can have proper hearings and deliberation, then let's simplify the definition of broker to what really matters: where digital assets are exchanged for fiat currency," Dorsey said. "Broker = Fiat-to-Crypto Exchange."

The bill as it was originally written would "stifle the next 20 years of innovation" from US crypto firms, said Anne Fauvre, Oasis Labs COO, via email.

"Regulation should be seen as a way to create guardrails around industries. What this bill does however is completely destroy one in its infancy - and in the process runs the risk of killing years of innovation and value creation from US-based companies," Fauvre said.

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