Why shouldn’t we tax crypto?

Maybe it’s because it’s not really about that at all. 

I’m talking, of course, about the bipartisan $1 trillion infrastructure bill, which has a provision that effectively transforms the way that crypto trading happens. As I’ve written about before, the bill, should President Joe Biden sign it into law, would essentially treat crypto like some other financial assets, and require sales and purchases to be reported by brokers and holders to the Internal Revenue Service. 

Lawmakers are doing this by expanding the definition of what a “broker” is. Anybody who’s “responsible for and regularly providing any service effectuating transfers of digital assets” would now have to report to agents of the I.R.S—people who don’t normally get invited to all the fun crypto parties in Silicon Valley.

The crypto lobby, as you might have guessed, didn’t much like that. 

They argued that the wording of the bill is too broad. The Electronic Frontier Foundation argued it creates new “surveillance provisions,” which is true, at least insofar as stocks, bonds, and property transactions are also logged and vetted. 

Sen. Ted Cruz went so far as to argue it would “endanger the privacy” of Americans. There’s also the argument that the definition could hobble innovation with onerous reporting and paperwork requirements, requiring otherwise nimble companies to bulk up with back offices to make sure they don’t run afoul of the law. It could ensnare bitcoin miners and other parties that aren’t directly involved in the apparent focus of the bill, which is taxing trades and speculation. 

The crypto world has always held out that it is a different beast from the buttoned-up world of Wall Street, that it could liberate business from the middlemen. This is undeniable in some ways, as is evidenced by the ledger recording every bitcoin transaction.

Maybe this is about the underlying message behind the estimated $28 billion in taxes that could be raised over the next decade. It really isn’t that much. The whole crypto shebang is worth about $2 trillion, and anyone worth their weight in Lambos thinks it’s only going to go higher. According to the nonpartisan Joint Committee on Taxation, those taxes wouldn’t even start bringing in any funds until 2023, at an estimated $1.5 billion or so. 

Look: nobody wants to get taxed. And tax and securities laws can sometimes have provisions that are so vague that they end up getting clarified by agency rule-making. Taxes are also a great leveler, which may be the true shocker in an industry with its fair share of exceptionalism. If crypto is going to trade like anything else, Uncle Sam can take a cut, and regulate it, just like anything else, too.

Kevin T. Dugan
@KevinTDugan

NEWSWORTHY

Microsoft’s other Amazon challenge. The Windows maker is challenging a secret $10 billion contract that was awarded to Bezos’ Amazon Web Services, one of the biggest ever. The details are scant, but dispute surfaced after Microsoft sought to dispute the deal. This is quite the reversal after Amazon was able to scuttle Microsoft's similarly-sized JEDI cloud deal with the Defense Department after arguing it was tainted by political bias. 

Twitchy speech. The streaming platform said it improved its chat filters in order to tamp down on "hate raiding," an abhorrent practice where users send large groups to harass others, typically because they aren't white, straight, or male. Amazon-ownedTwitch was responding to the #twitchdobetter hashtag that had blown on up social media, and says it will unveil more safety features in the future. 

Reddit's big upvote. I hesitate to use the term "decacorn," but here we are: Reddit is now worth $10 billion, thanks to a $410 million fundraising round, making it about as rare as a unicorn with ten horns. Earlier this year, the forum company was worth $6 billion. The new money makes the company about one-fifth as valuable as publicly traded Twitter—quite a big valuation for a company that's put so much emphasis on moderation. 

More online kid protection. TikTokannounced it was boosting some of its protections for underage users, including making it harder to send direct messages. It's unclear whether the measures taken by the Bytedance-owned app will actually tamp down on abuse, but it followed Apple, Google and others in adding more features to make the internet less toxic for kids. 

More sex harassment fallout. Three more honchos at ActivisionBlizzard—including the director of the massive Diablo 4 game—are out following a bombshell sexual harassment suit filed against the company. The suit has previously led to the ouster of J. Allen Brock, the company's ex-president, and let to unrest among the Blizzard rank-and-file. 

FOOD FOR THOUGHT

Grubhub drops the phone. Ever call a restaurant because your order's late? Or to find out what time they're open? What if I told you that the number you called might not have been the restaurant's?

Thanks to companies like Seamless—the parent of Grubhub—the internet is flooded with phone numbers that are instead registered by a third party that then charges the restaurant as much as nine dollars to have its own customers routed to them. 

Now that's kind of coming to an end. Grubhub is going to set up call centers to replace an algorithm that sometimes charged restaurateurs for these kinds of calls. From the New York Post:

Grubhub is doing away with a controversial phone ordering system that had restaurants across the nation paying the app commissions for orders that never took place, The Post has learned.

Starting Aug. 23, the food delivery and ordering company will be using call centers with actual customer service reps to facilitate orders from Grubhub-owned phone lines to restaurants, according to the Web site.

Previously, the Chicago company had relied on a computer algorithm to manage the phone lines it had set up to direct telephonic food orders to its restaurant clients.

IN CASE YOU MISSED IT

Bitcoin generated nearly $3 billion for miners in April by Marco Quiroz-Gutierrez 

Employees may need to keep up ‘the pretense of working’ as automation spreads, says A.I. expert Kai-Fu Lee by Nicholas Gordon

Fauci: Most people don’t need COVID-19 booster shots at this time by Chris Morris

Verizon offers free year of AMC+ to customers, but there’s a catch by Chris Morris

USD Coin is the latest stablecoin to have its stability cast in doubt by Rey Mashayekhi

A newly-released blueprint lays out the next steps in China’s tech crackdown by Bloomberg

Some of these stories require a subscription to access. Thank you for supporting our journalism.

BEFORE YOU GO

Delta force. There's an understated part of Samuel Beckett's Waiting for Godot where, after a fop and his dog come by for some hijinks, Vladimir notes "That passed the time"—only to have his companion, Estragon, retort drily: "It would have passed in any case."

What I'm trying to say here is that the pandemic will end one day, even though it feels like it won't. Pulitzer-winner Ed Yong over at The Atlantic explains the need not just to rely on vaccination rates as case numbers approach all-time highs: "Here, then, is the current pandemic dilemma: Vaccines remain the best way for individuals to protect themselves, but societies cannot treat vaccines as their only defense."