James Cirrone

Senator Cynthia Lummis had harsh words for the Biden Administration&#8217;s idea to <a href="https://blockworks.co/news/bitcoin-mining-tax-biden">impose a 30% tax on electricity used by bitcoin miners</a>. In a word, she rejected it completely.



&#8220;That isn&#8217;t going to happen,&#8221; Lummis told Chamber of Digital Commerce founder and CEO Perianne Boring at Bitcoin Miami last week.&nbsp;



The Wyoming Republican revisited the issue Thursday, <a href="https://twitter.com/SenLummis/status/1661803569341759495">tweeting</a> reports focused on her comments at the bitcoin-centric conference.&nbsp;



“A 30% tax hike on any specific industry is a blatant attempt by the administration to pick winners and losers,” Lummis wrote. “I will not let President Biden tax the digital asset industry out of existence.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">A 30% tax hike on any specific industry is a blatant attempt by the administration to pick winners and losers. I will not let President Biden tax the digital asset industry out of existence.<a href="https://t.co/GNUgfER8yr">https://t.co/GNUgfER8yr</a>&mdash; Senator Cynthia Lummis (@SenLummis) <a href="https://twitter.com/SenLummis/status/1661803569341759495?ref_src=twsrc%5Etfw">May 25, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



At the conference, Lummis also seemed to hint that bitcoin miners will simply flee the US should the Biden Administration institute the Digital Asset Mining Energy (DAME) tax, saying that “miners can mine anywhere.”



This is a point that has been made by industry participants as well. Marathon Digital CEO Fred Thiel told Blockworks in early May that in that kind of tax environment, miners would have no choice but to go abroad.&nbsp;



“We&#8217;re going to essentially make bitcoin mining unprofitable in the US. Then what you&#8217;re going to do is push it offshore,” Thiel said, talking about the tax.&nbsp;



A conservative think tank didn’t pull any punches on the Biden Administration either and <a href="https://blockworks.co/news/biden-crypto-tax-proposal-deserves-f">gave the DAME tax proposal a failing grade</a> in a scathing mid-May piece.&nbsp;



Industry members and conservatives aren’t the only ones attacking Biden on this, although much of it could be attributed to political grandstanding.



Robert F. Kennedy Jr., who is running for president as a Democrat, joined the dog pile right after the proposal was announced by the White House’s Council of Economic Advisers on May 2, 2023. He called it a “mistake.”



“It is a mistake for the U.S. government to hobble the industry and drive innovation elsewhere. Biden’s proposed 30% tax on cryptocurrency mining is a bad idea,” Kennedy <a href="https://twitter.com/RobertKennedyJr/status/1653808786577010697?lang=en">tweeted</a> on May 3, 2023.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Cryptocurrencies, led by bitcoin, along with other crypto technologies are a major innovation engine. It is a mistake for the U.S. government to hobble the industry and drive innovation elsewhere. Biden’s proposed 30% tax on cryptocurrency mining is a bad idea. 🧵&mdash; Robert F. Kennedy Jr (@RobertKennedyJr) <a href="https://twitter.com/RobertKennedyJr/status/1653808786577010697?ref_src=twsrc%5Etfw">May 3, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Biden Won’t Tax Crypto Out of Existence: Lummis

Shalini Nagarajan

Gov. Ron DeSantis of Florida declared his candidacy for the US presidency during a Twitter Spaces conversation alongside CEO Elon Musk and venture capitalist David Sacks on Wednesday.



In a broad conversation marked by technical difficulties, there were extended periods of silence and occasional hurried whispers. But amidst these challenges, DeSantis did manage to address his position on cryptocurrencies and digital assets, providing answers to those curious about his stance.



During the <a href="https://twitter.com/DavidSacks/status/1661516057373470720" target="_blank" rel="noreferrer noopener">conversation</a>, which attracted an audience of some 2.6 million, he expressed his endorsement of bitcoin (<a href="https://blockworks.co/price/btc" target="_blank" rel="noreferrer noopener">BTC</a>) and portrayed the attempts made by his opponents to regulate cryptocurrency as unwarranted government interference.



“The only reason these people in Washington don&#8217;t like it is because they don&#8217;t control it,” DeSantis said in response to a question about his views on the currency posed by Sacks.&nbsp;



“They&#8217;re central planners and they want to have control over society and so bitcoin represents a threat to them,” he added.



The SEC under the Biden administration has pursued a <a href="https://blockworks.co/news/sec-crypto-enforcement-actions-accelerate">series of enforcement actions</a> against cryptocurrency companies in the last year.



Governor DeSantis also made it clear that he would strongly stand against any potential attempt by Congress to ban bitcoin, although the prospect has never seriously been considered.



Technically, it’s no more possible to ban bitcoin than it is to ban a global commodity like gold — all the US government could do would be to ban itself and its citizens from making use of Bitcoin.



DeSantis is considered a top rival to Donald Trump for the Republican nomination, although he currently lags behind the former US president by a significant margin of over 30 percentage points in <a href="https://thehill.com/homenews/campaign/3983072-trump-tops-desantis-by-36-points-in-new-poll/">early polls</a>.



Trump&#8217;s <a href="https://blockworks.co/news/us-presidential-candidates-crypto">general view on crypto has been</a> negative, although policy-wise, little happened during his presidency. Both he and his wife Melania have <a href="https://blockworks.co/news/melania-trump-announces-potus-nft-collection-amid-controversy">launched NFT collections</a> since leaving the White House.



“I as president will protect the ability to do things like bitcoin,” DeSantis said. “I just do not have an itch to have to control everything that people may be doing in this space.”



He added that the Biden administration has clear hostility towards cryptocurrencies and that if it stays in power for another four years, “they&#8217;ll probably end up killing it,” without putting forward any theory on how.



Sacks agreed with him and acknowledged the large crypto community on Twitter, while Musk <a href="https://blockworks.co/news/elon-musk-crypto-dogecoin">chimed in</a> to mention the presence of a similar audience for dogecoin (<a href="https://blockworks.co/price/doge" target="_blank" rel="noreferrer noopener">DOGE</a>).



Relatedly, DeSantis mentioned that he is not in favor of central bank digital currencies (CBDCs). He highlighted that Florida recently <a href="https://blockworks.co/news/florida-approves-cbdc-ban">banned the use of government issued digital dollars</a> as a form of money in the state.



“If I&#8217;m President, we are not doing a central bank digital currency,” he said regarding the potential implementation of a CBDC on a national level. “I think that that would be a huge, huge imposition on people&#8217;s financial freedoms and financial privacy.”



He expressed that CBDCs would result in a significant shift of power from individual consumers to a central authority, and that this would be detrimental to a free society.



DeSantis has previously defended efforts in Florida school districts to ban books from libraries over the <a href="https://apnews.com/article/desantis-book-bans-censorship-florida-5e648efdf241e333c9d5b042e65a7be6" target="_blank" rel="noreferrer noopener">objections</a> of advocates for literary freedoms.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

DeSantis Campaigns on Pro-Bitcoin, Anti-CBDC Message

A conservative think tank isn’t happy with President Biden’s proposed tax on crypto miners.&nbsp;



The American Institute for Economic Research, in fact, was evidently displeased enough with the <a href="https://blockworks.co/news/bitcoin-mining-tax-biden">Biden administration’s latest crypto initiative</a> that it gave a failing grade to the president’s Council of Economic Advisors (CEA) — the federal agency that put out the <a href="https://www.whitehouse.gov/cea/written-materials/2023/05/02/cost-of-cryptomining-dame-tax/">proposal</a> on May 2.&nbsp;



Under the proposal, the Digital Asset Mining Energy (DAME) tax would eventually impose a federal 30% charge on the costs associated with crypto mining. The industry’s crypto mining efforts are typically concentrated on bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>), as well as other proof-of-work blockchains.&nbsp;



The American Institute for Economic Research’s Joshua Hendrickson in the AIER’s report took issue with the administration’s proposed incentive structure.



“Taxing a particular type of electricity-using activity does not provide an incentive to reduce electricity,” Hendrickson wrote in the report. “It provides an incentive to switch from the taxed electricity-using activity to other, untaxed, electricity-using activities.”



The chief executive of the publicly traded mining operator Marathon Digital, has been more blunt. CEO Fred Thiel <a href="https://blockworks.co/news/bitcoin-mining-tax-biden">told Blockworks earlier this month</a> that a tax as high as 30% would “essentially shut them down,” referring generally to bitcoin miners with US operations.&nbsp;



Hendrickson at the time also summed up the CEA’s argument: Bitcoin mining is a negative practice to a number of third parties. The CEA has claimed that bitcoin miners drive up the end price of electricity for consumers.&nbsp;



The problem with that line of reasoning, according to Hendrickson, is that the CEA is misplacing its financial blame.&nbsp;



“The source of the environmental cost is electricity generation, not bitcoin mining,” Hendrickson wrote. “If generating electricity imposes costs on third parties, then the externality argument implies that a tax should be placed on electricity generation.”&nbsp;



One key CEA argument as outlined in its proposal: Pollution from electricity generation, not consumption, “falls disproportionately on low-income neighborhoods and communities of color.”



The US Energy Information Administration <a href="https://www.eia.gov/todayinenergy/detail.php?id=44436">estimated</a> that 60% of all energy used for electricity generation had effectively been wasted through July 2020, some of the most recently available federal data.&nbsp;



Bitcoin miners may be able to combat climate change. Hendrickson wrote that buying leftover electricity units from power grids — especially electricity generated from natural gas — is one example of that.&nbsp;



“Stranded natural gas is typically burned, emitting methane in the process,” he wrote. “People are purchasing this stranded natural gas and using it to generate electricity to power bitcoin miners. In doing so, they are limiting harmful methane emissions.”



The left-leaning Greenpeace, meanwhile, in a May 5 <a href="https://www.greenpeace.org/usa/news/president-bidens-proposed-crypto-mining-tax-a-step-in-the-right-direction/">statement</a> said that the DAME tax is a step in the right direction, adding that the US can’t tax its way out of climate change.&nbsp;



The DAME tax originally stemmed from a March 9 federal government budget proposal. 



Its proposed phase-in was set to last three three years, with the tax beginning at 10% and then increasing another ten percentage points each year, according to a <a href="https://home.treasury.gov/system/files/131/General-Explanations-FY2024.pdf">document</a> from the Treasury.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Conservative Think Tank Stamps an ‘F’ on Biden’s Crypto Tax Proposal

In a tweet castigating Republicans for their budget priorities, President Joe Biden claimed on Tuesday that if Congress got rid of “tax loopholes that help wealthy crypto investors,” it would net the government $18 billion.&nbsp;



Crypto industry participants were confused, to put it mildly, with no small number decrying the president’s assertion — and denying the very existence of a so-called crypto tax loophole.



Adam Cochran, a managing partner at the digital assets-focused Cinneamhain Ventures, tweeted, “Crypto actually suffers compared to other assets on how gains are taxed on transfer between asset types. I&#8217;d challenge absolutely anyone to cite this supposed loophole.”



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We don’t have to guess what MAGA House Republicans value. They’re telling us. <a href="https://t.co/BM6JGMEFeq">pic.twitter.com/BM6JGMEFeq</a>&mdash; President Biden (@POTUS) <a href="https://twitter.com/POTUS/status/1655988502079602690?ref_src=twsrc%5Etfw">May 9, 2023</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In the Biden budget, eliminating the wash sale loophole for digital assets is forecast to <a href="https://www.whitehouse.gov/wp-content/uploads/2023/03/budget_fy2024.pdf">bring</a> in $23 billion over the next ten years. In 2024, however, that number is only anticipated to be $1.24 billion.&nbsp;



The question is, where is <a href="https://blockworks.co/tag/joe-biden">Biden</a> getting the $18 billion figure from?



The Wall Street Journal <a href="https://www.wsj.com/articles/biden-budget-to-propose-saving-hundreds-of-billions-by-cutting-drug-prices-fraud-5fa0f927">reported</a> in March ahead of the budget’s release that the president proposed a change to how crypto transactions are taxed that would raise $24 billion. The administration, at the time, said that crypto assets weren’t subject to the same wash trading rules that apply to stocks and bonds.



The <a href="https://blockworks.co/news/bitcoin-wash-trades-legal">wash trading exception in crypto has previously allowed traders to sell assets at a loss</a> and buy them back rapidly. Stock traders in the US are prohibited from wash trading, which can result in illicit tax benefits.&nbsp;&nbsp;



Bloomberg reported last week that crypto traders have still been <a href="https://www.bloomberg.com/news/articles/2023-05-03/us-crypto-traders-avoiding-billions-in-tax-by-loss-harvesting">avoiding</a> billions of dollars in taxes by exploiting wild price swings and employing wash trade tactics.&nbsp;



In a paper the outlet cited from the National Bureau of Economic Research, if traders had been sophisticated enough to use these tactics in 2018 (when Bitcoin crashed) at the scale they are now using the wash trading exception, the US Treasury would have lost a projected $16 billion. 



And a 2022 research note from Joseph Abate at Barclays <a href="https://www.bloomberg.com/news/articles/2022-05-11/crypto-investors-likely-paying-less-than-half-the-taxes-they-owe">estimated</a> that the funding gap from unpaid taxes by crypto traders could amount to around $50 billion a year, an extrapolation based on a 2017 IRS calculation.



But nowhere except for the president’s tweet does the crypto tax loophole seem to amount to $18 billion.&nbsp;



This isn’t the first time Biden has drawn the ire of those in the crypto industry. He recently proposed a <a href="https://blockworks.co/news/bitcoin-mining-tax-biden">30% tax on the cost of the electricity used by bitcoin mining</a>, prompting mining companies to push back in strong terms.&nbsp;



The White House didn’t immediately return a request for comment on Biden’s tweet.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Biden’s $18B Crypto Tax Tweet Puzzles Industry

Sebastian Sinclair

As the US 2024 presidential election slowly advances, several candidates are turning to the crypto industry in a bid to pick up additional votes ahead of next year’s race.



Nine candidates have so far filed with the Federal Election Commission to run for office, with three Democrats to the Republicans’ six, according to data from <a href="https://ballotpedia.org/Presidential_candidates,_2024">Ballotpedia</a>.



<h2 class="wp-block-heading">Kennedy Jr.</h2>



Democratic candidate Robert Kennedy Jr. <a href="https://www.nbcnews.com/politics/2024-election/robert-kennedy-jr-make-campaign-debut-bitcoin-conference-rcna83123">announced</a> last week he would make his first appearance as a presidential hopeful at the Bitcoin Conference in Miami later this month.&nbsp;



The nephew of former President John F. Kennedy has labeled crypto, including bitcoin, a “major innovation engine,” according to a tweet <a href="https://twitter.com/RobertKennedyJr/status/1653808786577010697?s=20">thread</a> last week. The environmental activist, lawyer and author first announced his bid on April 5.



“It is a mistake for the US government to hobble the industry and drive innovation elsewhere. Biden’s <a href="https://blockworks.co/news/bitcoin-mining-tax-biden">proposed 30% tax on cryptocurrency mining</a> is a bad idea,” he tweeted.



<h2 class="wp-block-heading">Biden and Williamson</h2>



The two other Democratic candidates include incumbent President Joe Biden — who announced his re-election bid late last month — as well as 2020 presidential candidate Marianne Williamson.



Following his <a href="https://blockworks.co/news/biden-signs-crypto-executive-order-promoting-responsible-innovation">executive order</a> in March of last year, President Biden believes the US has a chance to “reinforce American leadership in the global financial system” while recognizing the need for regulatory guardrails to protect consumers in crypto.



On paper, Biden’s order instructs multiple government agencies, including the <a href="https://blockworks.co/tag/federal-reserve">Federal Reserve</a>, to investigate the potential dangers and benefits crypto presents.&nbsp;



In practice, the order also opens the door for the exploration of a <a href="https://blockworks.co/tag/cbdc">centralized digital dollar</a>, to which some presidential candidates are vehemently opposed, namely Kennedy Jr.&nbsp;



Read more: <a href="https://blockworks.co/news/fednow-cbdc-save-us">FedNow Will Save the US From a CBDC</a>



Williamson, a lecturer and author of more than a dozen books, has been less vocal on the emergence of digital assets.&nbsp;



Last year, she <a href="https://twitter.com/marwilliamson/status/1494531491904335874?s=20">tweeted</a> “Canada, are you okay…?” in response to a video posted by local media True North outlining a statement from Deputy Prime Minister Chrystia Freeland.&nbsp;



In the video, Freeland discusses actions taken by the Royal Canadian Mounted Police to <a href="https://blockworks.co/news/government-crypto-powers-in-spotlight-after-canadian-trucker-protest-is-disbanded">freeze accounts associated with individual entities and crypto wallets</a> suspected of illicit activities.



While Williamson’s reaction could indicate some opposition to Canada’s decision to freeze crypto wallets, her take is more likely associated with what some have called an oppressive approach to anti-vaccine activists.



Williamson’s office did not immediately respond to Blockworks’ request for comment.



<h2 class="wp-block-heading">Haley, Elder, Hutchinson, Ramaswamy, Stapleton</h2>



Larry Elder, a conservative talk radio host who announced his candidacy on April 20, has not made any public statements regarding digital assets to date. Candidate Nikki Haley, former United Nations ambassador and South Carolina governor, has not provided any public statement on digital assets either.



Asa Hutchinson, Arkansas’s former governor who announced his bid on April 2, and Corey Stapleton, former Montana secretary of state, have also not provided any definitive policy, or public statements on the nascent asset class.



Blockworks attempted to contact Elder, Haley, Stapleton and Hutchinson, but has so far received no response.



In February, Vivek Ramaswamy, an entrepreneur and political commentator, also announced his campaign. Ramaswamy&#8217;s platform includes advocating for free speech, minimizing the federal government&#8217;s scope, challenging China, rejecting affirmative action policies, and opposing environmental, social and corporate governance initiatives.



Ramaswamy <a href="https://twitter.com/VivekGRamaswamy/status/1635604533526052864?s=20">tweeted</a> in March “Every GOP candidate needs a clear answer to CBDCs: hell no.”



<h2 class="wp-block-heading">Trump</h2>



Former US President Donald Trump announced his candidacy for a second attempt at a second term as president on Nov. 15, 2022. Trump previously <a href="https://twitter.com/realDonaldTrump/status/1149472282584072192?s=20">tweeted</a> he is “not a fan” of bitcoin and crypto, going so far as to dismiss their value as highly volatile and “based on thin air.”



“Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity,” he tweeted in July 2019.



“We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!”



Trump’s campaign media department did not immediately return Blockworks’ request for comment.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Here’s What US Presidential Hopefuls Are Saying About Crypto

Casey Wagner

Banks need more regulatory oversight, President Biden said during an address Monday morning about the recent closure of Silicon Valley Bank and Signature Bank.&nbsp;



The government has taken control over these institutions and no losses will be put on taxpayers, Biden said during the roughly four-minute <a href="https://www.youtube.com/watch?v=dLVbVqqsXF8" target="_blank" rel="noreferrer noopener">speech</a>. 



“Every American should feel confident that their deposits will be there, if and when they need,” Biden said. “Second, the management of these banks will be fired.”&nbsp;



Investors and banks will not be protected, according to Biden.&nbsp;



“They knowingly took a risk,” he said. “When the risk didn&#8217;t pay off, investors lose the money. That&#8217;s how capitalism works.”&nbsp;



There are “important questions” about how SVB and Signature found themselves in this position, the president said — problems his administration has signaled they’re working on addressing.&nbsp;



Biden did not take questions, leaving the podium as one press member asked for more clarity about why this crisis happened. The live feed was then cut.&nbsp;



The speech comes a day after US Treasury Secretary Janet Yellen, Federal Reserve Board Chair Jerome Powell, and FDIC Chair Martin Gruenberg said Sunday they are <a href="https://blockworks.co/news/signature-silicon-valley-bank-made-whole">taking action to protect the US economy</a> by strengthening public confidence in the banking system.



The failure of Silicon Valley Bank, located in Santa Clara, California, is to be resolved in a way that will fully protect all depositors, who will be granted access to their money starting from March 13, the regulators said in a <a href="https://www.federalreserve.gov/newsevents/pressreleases/monetary20230312b.htm" target="_blank" rel="noreferrer noopener">statement</a> Sunday evening.



“After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, California, in a manner that fully protects all depositors,” the statement said.&nbsp;



The closure of the banks prompted widespread fear across the crypto industry. Stablecoin <a href="https://blockworks.co/price/usdc" target="_blank" rel="noreferrer noopener">USDC</a> dropped to its lowest price ever over the weekend, more than 10 cents below its dollar peg. Circle said Sunday its “$3.3B USDC reserve deposit held at Silicon Valley Bank, about 8% of the USDC total reserve, will be fully available when U.S. banks open Monday morning.” 



“Trust, safety and 1:1 redeemability of all USDC in circulation is of paramount importance to Circle, even in the face of bank contagion affecting crypto markets,” co-founder and CEO of Circle Jeremy Allaire said in the <a href="https://www.circle.com/en/pressroom/3.3-billion-of-usdc-reserve-risk-removed-dollar-de-peg-closes" target="_blank" rel="noreferrer noopener">statement</a>. 



“We are heartened to see the U.S. government and financial regulators take crucial steps to mitigate risks extending from the banking system.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Biden: SVB, Signature Executives Will Be Fired

Bessie Liu

President Joe Biden’s 2024 Fiscal Year budget will propose tax changes on cryptoasset transactions to eliminate wash trading.



As cryptoassets are not classified as securities, existing cryptocurrency traders are able to claim tax-deductible losses on failed cryptoasset losses and allow them to buy back into the same investments.&nbsp;



Congress has previously considered changing the status of cryptoassets, but any bill is far from passage in the divided legislature.



This latest change in tax requirements for cryptocurrencies is expected to raise $24 billion for the Treasury, <a href="https://www.wsj.com/articles/biden-budget-to-propose-saving-hundreds-of-billions-by-cutting-drug-prices-fraud-5fa0f927">according to the Wall Street Journal</a>.



In addition to applying the same rules to crypto traders as investors in the stock market — the Biden administration is also planning to increase tax rates for America’s wealthiest 0.01% to a minimum of 25%.



Individuals making more than $400,000 a year would see an increase in their taxes from 37% to 39.6% and corporations would see their taxes go up from 21% to 28%.



Currently, cryptocurrencies are considered a digital asset and according to the Internal Revenue Service (IRS) are taxable if they generate a gain or loss, including but not limited to:



<ul>
<li>Sales for fiat currency</li>



<li>Exchange for goods and services&nbsp;</li>



<li>Airdrops&nbsp;</li>



<li>Minting and staking activities</li>
</ul>



The budget is expected to be released today, but will need to be approved by the House of Representatives and the Senate before receiving final sign-off from the President.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Biden Budget Takes Aim at Crypto Wash Trading

Ben Strack

<div id="highlights-block_6328925cda601" class="highlights">
 <ul>
 <li>More than half of respondents say a US CBDC would increase risks to privacy and security</li>
 <li>Survey was published the same day the White House released its first crypto framework</li>
 </ul>
 
</div>



As the federal government continues mulling how to best regulate crypto, a recent poll found that 55% of those surveyed said traditional banking regulations make them trust the industry more than the digital assets space.



The poll, published Friday by the Independent Community Bankers of America (ICBA), indicated that 71% believe investing in crypto is risky. Thirty-five percent of respondents are unaware that traditional banking sector laws do not apply to the segment.



The survey was released the same day that the White House shared <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/09/16/fact-sheet-white-house-releases-first-ever-comprehensive-framework-for-responsible-development-of-digital-assets/" target="_blank" rel="noreferrer noopener">its first “comprehensive framework”</a> for the crypto segment. The report came roughly six months after <a href="https://cms.blockworks.co/biden-signs-crypto-executive-order-promoting-responsible-innovation/" target="_blank" rel="noreferrer noopener">the Biden Administration’s executive order</a> in March that tasked government agencies with creating a pathway for regulating crypto and identifying the risks and potential for innovation within the space.



Reports so far gathered by President Biden recommend that agencies, such as the SEC and Commodity Futures Trading Commission (CFTC), should “aggressively” look to combat crypto-related crime, according to the framework published Friday.&nbsp;



Some industry watchers <a href="https://cms.blockworks.co/white-houses-latest-crypto-framework-lacks-clarity-some-say/" target="_blank" rel="noreferrer noopener">told Blockworks</a> Friday that the White House’s framework lacked specifics and leaned too heavily on the message of regulating by enforcement. 



The White House’s report said that the May crash of Terra’s algorithmic stablecoin and subsequent insolvencies that wiped out about $600 billion of investor funds highlights the need for more crypto education.



The Financial Literacy Education Commission (FLEC) will lead efforts to help investors understand crypto risks, identify fraudulent practices and learn how to report misconduct.



The ICBA poll also discovered that more than half of those surveyed — including a bipartisan majority — say the establishment of a US central bank digital currency (CBDC) would increase the risk of their personal financial privacy and security being breached.



While the Biden administration believes a CBDC could be beneficial, further research and development on the technology that would support a digital form of the dollar is needed, according to the framework.



“Policymakers should prioritize protecting national security amid catastrophic developments in the crypto markets while collaborating on a comprehensive regulatory framework that utilizes more effective alternatives to a US CBDC — including the <a href="https://www.frbservices.org/financial-services/fednow/about.html" target="_blank" rel="noreferrer noopener">FedNow</a> instant payments service,” ICBA President Rebeca Romero Rainey said in a statement.



The ICBA poll was conducted by Morning Consult last month and surveyed roughly 2,000 registered voters.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Americans Understand Crypto Risks, but Not Regulations, Survey Finds

<div id="highlights-block_62cfdf59a8cbe" class="highlights">
 <ul>
 <li>Michael Barr played advisor to the embattled Ripple Labs in 2015</li>
 <li>Fed chief Jerome Powell has said Barr’s role is “charged with setting the regulatory agenda”</li>
 </ul>
 
</div>



The Senate has confirmed former Ripple advisor Michael Barr as a top banking watchdog at the US Federal Reserve, after he received bipartisan support on Tuesday.



President Joe Biden <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/04/15/statement-from-president-biden-on-his-intent-to-nominate-michael-barr-to-serve-as-vice-chair-for-supervision-of-the-federal-reserve/" target="_blank" rel="noreferrer noopener">nominated</a> Barr to the role of vice chair for supervision of the Federal Reserve in April owing to his career in consumer protection and his role in shaping the 2010 Dodd-Frank Act following the 2008 financial crisis. 



Barr, once <a href="https://www.wsj.com/articles/biden-is-expected-to-tap-michael-barr-as-comptroller-of-the-currency-11611196272" target="_blank" rel="noreferrer noopener">pegged</a> to serve as comptroller of the currency, was also a top Treasury Department official during former President Barack Obama’s administration. He secured a 66-28 vote by the Senate, exceeding the simple majority of 50 votes required for confirmation.&nbsp;



“Today’s confirmation of Michael Barr as Vice Chair for Supervision of the Federal Reserve is important progress for my plan to tackle inflation and for sound oversight as we transition to steady and stable growth,” Biden said in a <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/07/13/statement-from-president-biden-after-senate-confirmation-of-michael-barr-to-the-federal-reserve/" target="_blank" rel="noreferrer noopener">statement</a>.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Confirmed, 66-28: Executive Calendar #976 Michael S. Barr to be Vice Chairman for Supervision of the Board of Governors of the Federal Reserve System for a term of four years.&mdash; Senate Cloakroom (@SenateCloakroom) <a href="https://twitter.com/SenateCloakroom/status/1547307273072017410?ref_src=twsrc%5Etfw">July 13, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



In 2015, Barr became an <a href="https://ripple.com/ripple-press/ripple-labs-names-michael-s-barr-as-advisor/" target="_blank" rel="noreferrer noopener">advisor</a> to Ripple Labs — which is at the center of a major lawsuit with the Securities and Exchange Commission that argues the company sold XRP tokens worth <a href="https://www.sec.gov/news/press-release/2020-338" target="_blank" rel="noreferrer noopener">$1.3 billion</a> as unregistered securities. He’s no longer listed as an advisor, and it isn’t clear when he left as he hasn’t listed professional experiences on <a href="https://www.linkedin.com/in/msbarr/" target="_blank" rel="noreferrer noopener">LinkedIn</a>. Ripple didn’t respond to Blockworks’ request for comment by press time.



In any case, the Fed will now have a full board for the first time since 2013, at a time when the US tackles its <a href="https://cms.blockworks.co/inflation-surges-again-in-june-bitcoin-slides-stocks-open-lower/" target="_blank" rel="noreferrer noopener">worst inflation</a> in 40 years. Barr&#8217;s role had been vacant since late 2021 after Fed governor Randal Quarles <a href="https://www.reuters.com/world/us/feds-randal-quarles-resign-end-december-2021-11-08/#:~:text=His%20term%20as%20head%20of,for%20supervision%20expired%20in%20October." target="_blank" rel="noreferrer noopener">stepped down</a> in October.&nbsp;



As a US central bank supervisor, Barr is expected to scale daily oversight of both the biggest lenders and smaller financial firms that play a part in the overall economy. He’ll also be in charge of developing regulatory policies for cryptocurrencies and stablecoins, which have been <a href="https://cms.blockworks.co/biden-signs-crypto-executive-order-promoting-responsible-innovation/" target="_blank" rel="noreferrer noopener">priorities</a> for the Biden administration.



The Fed’s chairman Jerome Powell <a href="https://www.rev.com/blog/transcripts/fed-chair-jerome-powell-press-conference-transcript-september-22-market-update" target="_blank" rel="noreferrer noopener">said</a> last year that he would accept the authority of the person in the supervision role as it is “charged with setting the regulatory agenda.”



Barr, who joins the Fed from the University of Michigan’s Gerald F. Ford School of Public Policy, <a href="https://www.banking.senate.gov/imo/media/doc/Barr%20Testimony%205-19-22.pdf" target="_blank" rel="noreferrer noopener">said in a May hearing</a> that he’s committed to softening inflation to the Fed’s 2% target and ensuring the financial system is “robust and resilient.”&nbsp;



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Former Ripple Advisor Michael Barr Will Supervise the Federal Reserve

<div id="highlights-block_6245bcca4f9c0" class="highlights">
 <ul>
 <li>A direct-to-consumer CBDC could be used as a “financial surveillance tool” by the federal government, according to Cruz</li>
 <li>Rep. Tom Emmer, R-Minn., introduced a House bill proposing the same objective in January</li>
 </ul>
 
</div>



Sen. Ted Cruz has proposed a bill echoing one introduced in the House in January, in an attempt to maintain the dollar’s dominance without competing with the private sector.



The latest <a href="https://www.cruz.senate.gov/imo/media/doc/cbdc.pdf" target="_blank" rel="noreferrer noopener">planned legislation</a>, introduced by the Republican senator from Texas, would prohibit the Federal Reserve from issuing a central bank digital currency (CBDC) directly to individuals.



A direct-to-consumer CBDC could be used as a “financial surveillance tool” by the federal government, similar to what is happening in China, according to Cruz.



“The federal government has the ability to encourage and nurture innovation in the cryptocurrency space, or to completely devastate it,” Cruz said in a statement.



<blockquote class="wp-block-quote">“This bill goes a long way in making sure big government doesn’t attempt to centralize and control cryptocurrency so that it can continue to thrive and prosper in the United States.”</blockquote>



CBDCs differ from decentralized currencies such as bitcoin, as they are issued and backed by a government and transact on a centralized permissioned blockchain.&nbsp;



President Joe Biden signed an executive order earlier this month that calls on a variety of government agencies to study the “responsible development” of digital assets. It also mentions “placing urgency” on the research and potential development of an American CBDC.



Industry watchers <a href="https://cms.blockworks.co/bidens-crypto-executive-order-may-be-watershed-moment-despite-lack-of-specifics/" target="_blank" rel="noreferrer noopener">previously told Blockworks</a> that though the order is an important step in the policymaking process, concrete legislation could take years.



Rep. Tom Emmer, R-Minn., <a href="https://cms.blockworks.co/us-rep-tom-emmer-proposes-bill-to-shape-cbdc-plans/" target="_blank" rel="noreferrer noopener">introduced a House bill</a> that would prevent the Fed from issuing a CBDC to individuals in January.



The Federal Reserve <a href="https://cms.blockworks.co/fed-opens-debate-on-cbdc-takes-no-policy-stance/" target="_blank" rel="noreferrer noopener">issued a report</a> that month that expressed potential interest in a CBDC that is “identity-verified” but did not take any policy stance. The agency is soliciting public comments through May 20.



“I’m glad Senator Cruz has agreed to offer a Senate companion to my legislation limiting the Fed’s authorities,” Emmer said in a statement. “The Fed must only craft a CBDC framework that is open, permissionless and private — meaning any digital dollar must be accessible to all, transact on a blockchain that is transparent to all and maintain the privacy elements of cash.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Ted Cruz’s Senate Bill on CBDCs Replicates January House Proposal

<div id="highlights-block_6234b7c7b19c3" class="highlights">
 <ul>
 <li>National Security Advisor Jake Sullivan and National Economic Council Director Brian Deese will coordinate the executive order’s implementation</li>
 <li>Treasury Secretary Janet Yellen and Attorney General Merrick Garland are tasked with various analyses around digital asset implications</li>
 </ul>
 
</div>



In his executive order last week, President Joe Biden called on a swathe of government agencies to work together to study the “responsible development” of digital assets.



But who is in charge of what, and when exactly will these efforts conclude?



Biden notes in the executive order that the assistants to the president for national security affairs and for economic policy “shall coordinate the executive branch actions necessary to implement this order.”



Jake Sullivan, a national security advisor for President Biden since January 2021, was previously the deputy assistant to former President Barack Obama, a national security advisor to Biden during his tenure as vice president, and deputy chief of staff to Hillary Clinton at the State Department.



Brian Deese serves as the director of the National Economic Council (NEC). Between 2009 and 2015, he was a special assistant for economic policy to Obama, deputy director of the NEC, and acting director of the Office of Management and Budget. He also served as a senior advisor to Obama from 2015 to 2017.



Before his latest appointment, Deese worked as the global head of sustainable investing for BlackRock, the world’s largest asset manager.



“We are clear-eyed that ‘financial innovation’ of the past has too often not benefited working families, while exacerbating inequality and increasing systemic financial risk,” Sullivan and Deese said in a statement published alongside the executive order.



<blockquote class="wp-block-quote">“This history underscores the need to build robust consumer and economic protections into digital asset development.”</blockquote>



John Collins, partner at advisory firm FS Vectors and former policy head at Coinbase, called Sullivan and Deese “incredibly smart and well respected.”



“Their positions as leaders here is a really good indication of where [the government’s] head is at,” he told Blockworks.



<h3 class="wp-block-heading">Which agencies are involved?</h3>



The interagency process that Sullivan and Deese lead shall include the following entities, Biden notes in the order:



<ul><li>the secretaries of state, treasury, defense, commerce, labor, energy and homeland security; </li><li>the attorney general;</li><li>the administrator of the Environmental Protection Agency;</li><li>the director of the Office of Management and Budget; </li><li>the director of National Intelligence; </li><li>the director of the Domestic Policy Council;</li><li>the chair of the Council of Economic Advisers; </li><li>the director of the Office of Science and Technology Policy; </li><li>the administrator of the Office of Information and Regulatory Affairs; </li><li>the director of the National Science Foundation; and </li><li>the administrator of the United States Agency for International Development.</li></ul>



“Governments alone cannot solve these problems, and definitely not a government that operates in silos,” Sullivan and Deese said in the statement.



Officials from other agencies may be invited to attend interagency meetings, Biden adds in the order, including representatives from:



<ul><li>the Board of Governors of the Federal Reserve System;</li><li>the Consumer Financial Protection Bureau;</li><li>the Federal Trade Commission (FTC);</li><li>the Securities and Exchange Commission (SEC);</li><li>the Commodity Futures Trading Commission (CFTC);&nbsp;</li><li>the Federal Deposit Insurance Corporation (FDIC); and</li><li>the Office of the Comptroller of the Currency (OCC).</li></ul>



A report by bitcoin company NYDIG argued that the executive order “notably excluded strong input from financial regulators such as the SEC, CFTC and OCC.”



<h3 class="wp-block-heading">When are the deadlines?</h3>



The <a href="https://www.whitehouse.gov/briefing-room/presidential-actions/2022/03/09/executive-order-on-ensuring-responsible-development-of-digital-assets/" target="_blank" rel="noreferrer noopener">executive order</a> focuses on crypto regulation around consumer protection, financial stability, risk mitigation, the US’s financial leadership, financial inclusion and responsible innovation.



Biden has tasked Treasury Secretary Janet Yellen to submit a report on the implications of digital asset adoption and the changes in financial market and payment system infrastructures within six months.



She is to convene the Financial Stability Oversight Council (FSOC) within seven months to outline financial stability risks and regulatory gaps posed by digital assets and offer recommendations to address them.



Yellen is also expected to produce a report about the future of money and payment systems within six months. The report should include the potential implications of a US central bank digital currency (CBDC), the executive order states.



Federal Reserve Chair Jerome Powell is encouraged to research and report on the extent to which CBDCs could improve the efficiency and reduce the costs of existing and future payments systems. He has been asked to detail the steps for the potential launch of a CBDC.&nbsp;



In its January <a href="https://cms.blockworks.co/fed-opens-debate-on-cbdc-takes-no-policy-stance/" target="_blank" rel="noreferrer noopener">Central Bank Digital Currency report</a>, the Federal Reserve declined to make policy recommendations.



Attorney General Merrick Garland is to assess whether legislative changes would be necessary to issue a US CBDC within six months. He will also issue a report in that timeframe on the role of law enforcement agencies in detecting, investigating and prosecuting criminal activity related to digital assets.



Other planned research includes distributed ledger technology’s impact on the environment, which Dr. Alondra Nelson, director of the Office of Science and Technology Policy, will submit within six months.



Commerce Secretary Gina Raimondo shall establish a framework for enhancing the country’s economic competitiveness in, and leveraging of, digital asset technologies.



The Senate Committee on Banking, Housing and Urban Affairs <a href="https://cms.blockworks.co/impossible-for-russia-to-evade-sanctions-with-crypto-fincen-rep-says/" target="_blank" rel="noreferrer noopener">held a meeting Thursday</a> addressing the role of digital assets in illicit finance.



Up to 90 days after illicit finance risks are submitted to the Congress of the National Strategy for Combating Terrorist and Other Illicit Financing, Yellen, Garland and Secretary of State Antony Blinken, among others, may offer additional views on the topic.



Yellen shall then develop a coordinated action plan based on the strategy’s conclusion within 120 days, the executive order notes.



Additionally, Biden has ordered Garland to analyze how to strengthen international law enforcement cooperation for detecting, investigating and prosecuting <a href="https://cms.blockworks.co/impossible-for-russia-to-evade-sanctions-with-crypto-fincen-rep-says/" target="_blank" rel="noreferrer noopener">criminal activity</a> related to digital assets.



Though <a href="https://cms.blockworks.co/bidens-crypto-executive-order-may-be-watershed-moment-despite-lack-of-specifics/" target="_blank" rel="noreferrer noopener">industry watchers said</a> the executive order was an important step in the policymaking process, they said legislation could take years.



“We may not like every single policy proposal that’s put forth six months from now,” Blockchain Association Executive Director Kristin Smith previously told Blockworks. “But at least we can think methodically about this and engage with the government.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.