Zero Capital Gains Tax for U.S. Crypto Projects Sparks Policy Revolution
The crypto world is abuzz this week with significant updates on tax policies and regulatory shifts that could shape the future of blockchain innovation in the United States.
Zero Capital Gains Tax for U.S.-Based Crypto Projects
Eric Trump has reportedly revealed a groundbreaking tax proposal that could bring zero capital gains tax to certain U.S.-based crypto projects like XRP and HBAR. This development contrasts starkly with the ~30% capital gains tax proposed for non-U.S.-based projects, signaling a clear incentive for blockchain ventures to establish their roots in the United States.
Ted Cruz's Fight Against DeFi Tax Reporting Rules
Senator Ted Cruz is taking a stand against a controversial IRS rule targeting the decentralized finance (DeFi) sector. The rule, finalized last December, mandates that DeFi brokers report gross proceeds and disclose user information, including names and addresses, via Form 1099—a requirement traditionally applied to centralized securities brokers.
Critics argue that the rule undermines the decentralized nature of DeFi, complicates compliance, and threatens user privacy. Senator Cruz plans to introduce a Congressional Review Act resolution next week to overturn the regulation. This act allows Congress to rescind regulations within 60 days of their implementation, and with a Republican majority in Congress, Cruz's proposal is expected to gain considerable support.
Key Concerns Around the IRS Rule
The IRS's broad definition of "brokers" includes non-custodial entities with access to user information, even if they do not directly hold assets. This creates significant compliance challenges for DeFi platforms, which often lack centralized entities to manage or report such data. Industry leaders fear that these requirements could stifle innovation and push blockchain projects out of the U.S.
Cruz’s Vision for Crypto Innovation
An outspoken advocate for cryptocurrency, Senator Cruz sees DeFi as a cornerstone of blockchain innovation and a counterbalance to the centralized control inherent in Central Bank Digital Currencies (CBDCs). He has consistently championed decentralized alternatives like Bitcoin and views these IRS regulations as an existential threat to the burgeoning crypto sector in the U.S.
What’s Next?
As these developments unfold, the crypto community is closely watching for updates. If Cruz’s resolution gains traction, it could mark a significant victory for the DeFi sector and set a precedent for more crypto-friendly policies in the U.S.
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