Janet Yellen lobbies against Bitcoin

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In July, the White House and Sen. Rob Portman (R-Ohio) agreed to a proposal that would demand increased tax obligations for bitcoin “brokers” as a way to help fund the bipartisan infrastructure bill. However, the questionable definition the agreement provides of what a “broker” in the Bitcoin network would be has sparked criticism and revolts.

Under the terms of the original proposal, free and open source software (FOSS) developers in the Bitcoin space, bitcoin miners, node operators and hardware wallet manufacturers would be considered “brokers” and therefore required to meet the new requirements.

The initial plan, developed by Portman with help from Treasury Department officials, aims to increase tax revenue from bitcoin and cryptocurrency transactions by making two changes. The first would require that bitcoin payments over $ 10,000 be reported to the US Internal Revenue Service (IRS). The second would require “brokers” in the bitcoin space to file a Form 1099 for transactions with BTC and other cryptocurrencies. This is where the confusing definition of “broker” comes in.

While actual bitcoin brokers – regulated bitcoin exchanges such as Coinbase – could realistically file 1,099 forms under such circumstances, the proposal would also require the deposit of a wide range of players in the Bitcoin space. But software developers, miners, node operators, hardware wallet makers, Lightning channels, and the like can’t get the information they need to fill out 1099 forms – they don’t know who their users are.

As a result, the Biden administration would end up crippling the growth of the Bitcoin network, adoption of the Bitcoin currency, and innovation across all related industries and businesses.

Some senators opposed the proposal, drawing up amendments. The proposal was rebuked by Wyden, Senator Patrick Toomey and Senator Cynthia Lummis, who pushed for an amendment intended to prevent the Biden administration from applying the new rules to such a wide range of players in the Bitcoin network.

But US Treasury Secretary Janet Yellen has lobbied against such deals, the Washington Post reported. Yellen spoke to lawmakers on Thursday to raise objections and put pressure on Wyden on the matter, pushing back against an attempt to limit the proposal.

The Treasury Secretary, however, is filled with fear and loathing for Bitcoin. In February, she told CNBC that she didn’t see the use of Bitcoin and didn’t believe it could be used as a transaction mechanism.

“I’m afraid it’s often for illicit funding,” Yellen told CNBC. “It is an extremely inefficient way to conduct transactions, and the amount of energy consumed to process these transactions is staggering.”

Besides not understanding a percent of what Bitcoin is, Yellen has had its own share of controversies. She’s made millions of corporate speeches on Wall Street over the past two years. These “speaking fees” were paid by large corporations such as Citi, Goldman Sachs, Google, City National Bank, UBS, Citadel LLC, Barclays, Credit Suisse and Salesforce.

His interests, however, appear to be conflicting to say the least. In January, light was shed on how Yellen received $ 810,000 from one of the companies involved in last year’s GameStop affair. Citadel, the payer, was losing money as GME skyrocketed, fueled by a short squeeze, only to see GameStop trading magically halted by brokers across the United States after a while.

Yellen’s “speaking fees” have created a buzz and underline just how misaligned his incentives could be. She would earn $ 221,400 a year in her government job while earning $ 7 million from “talk” to banks. There is already an online petition asking Yellen to step down as US Secretary of the Treasury.

Despite Yellen’s power of influence, senators worked on the proposed changes. Senator Cynthia Lummis, for her part, said “the fight is on”. But the latest text, released today, is still far from ideal, as Pierre Rochard noted.

“As written, the amendment excludes passive node operators who only validate transactions but do not broadcast or relay transactions,” Rochard tweeted. “It also does not exclude minors as they provide some other function / service. It does not exclude free open source software.”

Additionally, the text does not exempt manufacturers of hardware wallets and Lightning nodes and channels. If approved under such conditions, the bill would cripple the current position of the United States in the Bitcoin space, particularly in mining. Since China implemented crackdowns on the industry, many companies have flocked overseas and the United States has been a popular destination. But with the changes the bill seeks to install, developers, miners, and many Bitcoin players could flee the country.

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