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US Senator Cynthia Lummis is pushing back against the cryptocurrency tax proposal put forth by the Biden Administration, arguing that it unfairly favors certain groups while disregarding others. The taxation of Bitcoin mining has long been a contentious topic in the United States, and it has drawn significant criticism from the Biden administration.
Proposed Tax Measures
The Biden administration has outlined plans to implement strict taxes on Bitcoin mining due to its high energy consumption. One of the proposed taxes is called the Digital Asset Mining Energy Excise Tax (DAME), which was included in the administration's budget for the fiscal year 2024. Under this proposal, cryptocurrency mining companies would be required to pay a tax equivalent to 30% of the electricity costs incurred during the mining process. The tax is set to take effect next year and will be gradually phased in over a three-year period, increasing by 10% annually until reaching the targeted 30% by the end of 2026.
Strong Opposition
The proposed tax has faced fierce opposition from influential figures in the cryptocurrency community, who argue that the administration's priorities are misaligned. Notably, Robert F. Kennedy Jr., a candidate for the United States presidency, has strongly criticized the bill, labeling it a "bad idea." Kennedy has publicly aligned himself with the Bitcoin community, joining others in denouncing the proposal.
Senator Cynthia Lummis, a prominent voice against the tax, has been vocal in her opposition. During the Bitcoin 2023 conference, she voiced her disagreement with the bill, assuring the audience that such a tax would not be implemented. Lummis later reiterated her stance on Twitter, stating that she would oppose the proposal in Congress, as she believes that imposing a 30% tax hike on a specific industry demonstrates the administration's favoritism and attempts to pick winners and losers. She emphasized the need to embrace innovation, with digital assets representing the future of financial innovation, and expressed her determination to prevent the digital asset industry from being taxed out of existence.
Cryptocurrency regulation and taxation have become significant topics in the US budget discussions. In addition to the proposed 30% tax on crypto mining activities, the Biden administration has expressed its intention to close tax loopholes for wealthy crypto traders. President Biden's comments on the matter have caused confusion within the crypto community. However, experts believe he was referring to the absence of wash trading rules, which allows traders to engage in tax-loss harvesting. If the proposal becomes law, it could lead to miners relocating to other jurisdictions, casting doubt on the future of the crypto industry in the United States amid increasing regulatory pressure.
Reintroduction of the Responsible Innovation Act
Senator Lummis, in collaboration with Democratic Senator Gillibrand of New York, plans to reintroduce the Responsible Innovations Act with some amendments, including stronger customer protections. This comprehensive bill, initially introduced last year, aims to regulate the crypto industry in the United States.
Lummis and Gillibrand are working with Patrick T. McHenry, Chair of the House Financial Services Committee, and Maxine Waters to divide the bill among different committees and advance its passage. Speaking at the Bitcoin 2023 conference, Lummis stated, "We're likely to see the House introduce a stablecoin bill first, followed by the introduction of the Lummis-Gillibrand bill in the Senate, which will cover a broad range of regulations."
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