On Friday, Representative Patrick McHenry, the outgoing Chairman of the House Financial Services Committee, sent a parting shot to Secretary of the Treasury Janet Yellen regarding her profound failure to enable the emerging digital asset sector. The letter was signed by both Republicans and Democrats, displaying a rare agreement on the Biden Administration’s policy shortcomings.
Digital assets are inevitable. Eventually, all securities will be digital, and other assets will follow. The Biden administration’s inept approach, from both the elected and appointed sectors, undermined the country’s advancement of this segment of FinTech.
In the missive, the Representatives request that the Treasury and the Internal Revenue Service (IRS) halt an attempt to initiate tax reporting demands for brokers of digital assets. The letter explains that pending rules do not effectively address the digital asset ecosystem and are inappropriate for DeFi platforms and noncustodial wallets.
“… we are concerned that Treasury and the IRS will finalize the remaining provisions, which would threaten the digital asset ecosystem’s presence in the United States.”
The Representatives expressed their concern that these rules would foster an “insurmountable regulatory burden” that would harm emerging technology.
“We urge the IRS to do the right thing for innovation in the U.S. and abandon the remaining provisions of its proposed guidance on tax reporting requirements applicable to certain “brokers” of digital assets.”
While tax reporting is just one aspect of the digital asset ecosystem, the Biden Administration has failed to recognize the benefits of distributed ledger technology and the need for the US to lead, not follow, digital asset innovation. From the Securities and Exchange Commission, which too frequently pursued political goals misaligned with the Commission’s mission during the Biden Administration, to other policymakers aligned with the anti-Fintech innovation ideology, the Biden Administration displayed an inability to show leadership in digital assets. This has created a significant opportunity for the incoming Trump Administration to embrace a policy of Fintech innovation, which will be to the benefit of the country.