Patrick McHenry, the Republican Chairman of the powerful House Financial Services Committee, claimed that the Biden Administration‘s newly proposed cryptocurrencytax regulations are an attempt to “kill” crypto adoption in the United States.
In a statement on Friday, McHenry said the proposed rules from the Treasury Department and IRS lack clarity and reveal the administration’s hostility towards the burgeoning crypto industry. He urged the Biden administration to work cooperatively with Congress to develop clear, tailored regulations that enable innovation, rather than stifling it with blunt bureaucratic requirements.
Specifically, the proposed rules would require cryptocurrency exchanges to report customer transaction data to the IRS, similar to existing tax reporting requirements for stock brokers. The goal is to crack down on crypto tax evasion by making it easier for the IRS to track gains.
However, critics like McHenry argue this “one-size-fits-all” approach could cripple decentralized exchanges and protocols, which are built on user privacy and anonymity. By mandating customer data collection, the rules may essentially outlaw decentralized networks, forcing the industry to centralize around a few compliant players.
As Chairman of the Committee responsible for financial services legislation, McHenry has frequently clashed with Congressional Democrats over how to regulate cryptocurrencies. He argues these proposed tax reporting requirements fail to appreciate the nuances of decentralization and could severely undermine the adoption of and innovation in digital assets.
The proposed regulations are open for public feedback until October 30th. McHenry said the Administration needs to work with crypto experts to tailor smart rules that address tax evasion while still nurturing technological progress. He urged policies like safe harbors to support DeFi development. If not, McHenry contends this tax plan could critically wound America’s leadership in the blockchain economy.
