Saturday, April 20, 2024
Regulation

Deal to avoid US debt default nixes proposed 30% crypto mining tax, says Ohio lawmaker

A tentative deal aimed at stopping the United States government from defaulting on its debts would likely eliminate a proposed tax on the energy usage of cryptocurrency miners, according to Ohio Rep. Warren Davidson.

On May 28, U.S. lawmakers released a draft of a bill allowing the government to increase the debt ceiling — an imposed limit on the amount of debt the Treasury Department can incur — following negotiations with President Joe Biden and House Speaker Kevin McCarthy. The legislation still needs congressional approval before taking effect to avoid a seeming economic catastrophe for the U.S. government.

Under the proposed bill, there would be a two-year suspension of the debt ceiling, allowing the U.S. government to continue to borrow money and settle its debts. President Biden reportedly wanted the deal to include certain tax increases for corporations and high-income individuals, but the most recent draft suggested this was unlikely.

In a May 28 tweet, Davidson said the bill blocked “proposed taxes,” including a 30% tax on electricity used by cryptocurrency miners that had been suggested as part of President Biden’s FY2024 budget. Should the latter have passed, miners could have faced a 10% tax increase each year over three years on electricity generated starting in 2024.

“The agreement […] represents a compromise, which means no one got everything they want,” said President Biden following negotiations. “The agreement prevents the worst possible crisis, a default, for the first time in our nation’s history.”

Related: New White House standards strategy could have implications for crypto industry KYC

Many in the space had criticized the White House and supporters of the mining tax long before the threat of debt default appeared to be an issue. Bitcoiners including former Kraken growth lead Dan Held lauded the debt ceiling bill.

The U.S. government isn’t quite out of the woods with the debt default deadline, expected in June. Though the bipartisan deal suggested lawmakers are moving forward, the debt ceiling bill still faces a divided House of Representatives, with many Republican lawmakers openly hostile to Speaker McCarthy. The government body is expected to meet and vote on the legislation on May 31.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

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