Patrick McHenry, Chairman of the House Financial Services Committee, criticized recently proposed cryptocurrency taxation rules on August 25. The US Treasury mandated cryptocurrency brokers to report user information to the IRS. This prevents tax evasion. A new Form 1099-DA helps taxpayers calculate taxes specifically for cryptocurrencies and NFTs. McHenry expressed his concern, stating that:
“Following the passage of the Infrastructure Investment and Jobs Act, numerous lawmakers of both parties made clear that any proposed rule must be narrow, tailored, and clear.”
McHenry called the rules overly broad and part of the Biden Administration’s attack on the digital asset ecosystem. He emphasized that any new rule should be specific, precise, and well-defined, as required by the Infrastructure Investment and Jobs Act introduced by the Biden administration in 2021.
Despite acknowledging that the proposal was still in its early stages, McHenry welcomed the delayed effective date and exemptions in the proposal. He urged President Biden’s administration to stop its attempts to harm the digital asset ecosystem and encouraged collaboration with Congress to create effective crypto legislation.
McHenry also promoted his bipartisan legislation, the Keep Innovation in America Act, which defines “broker” for tax reporting purposes to include only companies that facilitate digital asset transactions, excluding miners, node operators, and hardware operators.
Contrary to McHenry’s proposal, reports from Bloomberg indicated that the IRS and Treasury’s proposal would cover decentralized finance (DeFi) and non-fungible token (NFT) platforms while excluding mining and staking operations.
McHenry, a Republican Representative from North Carolina, is known for his pro-cryptocurrency stance. He has supported various crypto-related bills, such as the Clarity for Payment Stablecoins Act of 2023, the Digital Tokens Act of 2021, and the Ransomware and Financial Stability Act of 2021. He’s also commented on significant events in the crypto industry, including PayPal’s introduction of a stablecoin and regulatory responses to BlackRock’s Bitcoin ETF application.