According to Fortune, Washington is trying to regulates Bitcoins, but some people are trying to stop it.
The massive surge in the price of cryptocurrencies has helped a large number of Bitcoin aficionados in striking gold. But now they have all come together to safeguard the ascent of this dynamic cryptocurrency industry amidst much hustle caused by advocacy groups who are trying to bring upon a legislative drive which can handicap the growth surge of Bitcoins by imposing tax-reporting requirements and enhanced regulations.
Organizations like Bitcoin Foundation, Coin Center Inc. and Chamber of Digital Commerce are all equally afraid of legislations bottlenecking innovative drives. A Senate bill requiring stricter money-laundering laws is serving as their top target. Certain advocates are also supporting a House bill which has proposed an exemption of crypto transactions up to $600 from publishing capital-gains tax reports.
This massive lobbying came immediately after the price of Bitcoin showcased magnanimous potential and a hike of up to $17000 following its debut as a futures contract by CBOE. Although some are wary about the fact that regulators might subject cryptocurrencies to stiffer regulations, optimists feel that this effort by the regulatory bodies will be similar in its effectiveness to the one put in to place for ceasing the rise of internet.
Llew Claasen, the executive director of the non-profit advocacy group Bitcoin Foundation wrote in a Nov. 30 letter addressed to the Senate Judiciary Committee that,
“This technological innovation must be allowed to develop, be rolled out and tested in real environments without material interference or overburdening regulations, especially at the initial stages of its adoption.”
Iowa Republican Chairman Chuck Grassley revealed in a statement meant for the 28th November hearing that an anti-money laundering legislation is being considered by the committee which would close all loopholes and deploy new tools for tackling criminal activities and terrorism financing. The bill shall include a section which will dig deeper into understanding the definition of “financial institution” which shall include a redeemer, issuer or cashier of “digital currency” and “any digital exchanger or tumbler of digital currency.”
Thus, it will be imperative for bitcoin handlers to bring suspicious transactions into light and also shoulder similar level of anti-money laundering obligations as that of banks. This is the only way in which concerns can be raised amongst general public about digital currencies being used to propel illegal activities.
Burden Of Compliance
The committee is being urged by the Bitcoin Foundation to do away with the section pertaining to cryptocurrencies from the Senate bill. They have also pleaded to otherwise limit the language in regards to digital currency exchanges. The foundation feels that the burden of compliance shall encompass the benefit derived from technology development in the U.S. A not for profit research and advocacy organization Coin Center located in Washington, has already organised a meeting with the Congress members and their staff.
Director of research, Peter Van Valkenburgh had argued that in spite of policy goals making sense, the drafting language has not been framed in a proper manner. Financial Crimes Enforcement Network of the Treasury Department or FinCEN tracks all illicit payments. It has issued adequate guidance back in 2013 advising people about the correct use of virtual currencies.
Peter Van Valkenburgh added that either the FinCEN guidance needs to be incorporated or the language needs to be removed. Washington-based trade association, Chamber of Digital Commerce comprising of more than 130 companies all of which represent the blockchain and digital asset industry also feels the same way about the language being unnecessary. It had also addressed a statement to the committee and had organised a meeting with the general counsel and global policy director of the chamber, Amy Kim.
Telephone and email requests for comment regarding the same have not yet been responded to by the Grassley spokesperson. Dianne Feinstein revealed that the senator is working in collaboration with the Justice and Treasury departments for getting technical guidance with the forward moving bill. Yaya Fanusie, the director of analysis at the Center on Sanctions and Illicit Finance at the Washington based Foundation for Defense of Democracies revealed that the inadequacy of regulation can pose as an area of concern for some people. However, it’s not such a big issue in the U.S. Lawmakers should consult the crypto currency for better understanding of the nitty-gritties of the same before drafting regulations and legislations. Fanusie pointed out that, “you have to be very precise because we’re talking about a new industry and new terminology.”
Representative Jared Polis, a Colorado Democrat and a co-sponsor of the measure with Arizona Republican David Schweikert feels that The Cryptocurrency Tax Fairness Act of 2017 introduced back in September will assist in increasing consumer confidence. Transactions up to $600 shall be exempted under the bill for tax reporting purposes. Polis feels that this measure will assist in removing an obstacle from digital currency usage for fostering daily commerce. Polis stated that, “clearly, there needs to be a more formal safe harbor if we ever expect widespread use.” He tried to include the bill in the House tax measure as an amendment but remained largely unsuccessful.
Digital currency was classified by IRS as a property back in 2014 thus subjecting transactions to capital gains tax. Making use of virtual currencies such as bitcoins for proceeding with financial transactions is considered to be similar to property exchange. Bryan Skarlatos, a tax attorney working at Kostelanetz & Fink LLP who had written and lectured about bitcoin feels that all such transactions need to be tracked for monitoring gains and losses. Skarlatos said that the $600 exemption will not affect the digital currency transactions entered into by people for investment purposes which is the main reason behind the building up bitcoin traffic. He also added that,
“You’re basically inviting people to become out of compliance with the law, and that’s never a good place to be.”
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