Key Takeaway: While the White House continues to express skepticism towards the crypto industry, lawmakers in Congress are taking note and continuing to examine how best to regulate industry participants.
Digital Asset Mining Excise Tax: Last week, The White House Council of Economic Advisers (CEA) shared more details on its proposal for a Digital Asset Mining Excise (DAME) tax on crypto mining firms equal to 30 percent of the cost of the electricity they use on mining operations. According to the White House, after a phase-in period, certain firms would face a tax equal to 30% of the cost of the electricity they use in crypto mining. While the proposal is certainly worth monitoring, Democrats and Republicans in Congress are finding a hard time agreeing on even the lowest-hanging fruit in the crypto world (such as stablecoin legislation). Therefore, finding agreement on an energy and crypto policy proposal seems unlikely. Further, it’s unlikely that the Republican-controlled House would consider imposing a crypto mining tax regime any time soon. That said, the DAME blog post serves as another illustration of the White House’s increasingly hostile stance toward crypto and that the environmental impact of crypto mining as a policy issue does not appear to be dying down any time soon (albeit the messaging likely will not amount to anything more than messaging).
White House Posture Towards Crypto: As the Biden Administration continues the critical posture towards crypto, Members of Congress are watching. In fact, last week two House Financial Services Committee Members – Reps. Warren Davidson (R-OH) and Mike Flood (R-NE) – sent a letter to the CEA expressing concern over the White House’s stance on crypto. In particular, the letter states: “Ultimately, if our approach does not change, this posture will continue to push entrepreneurs to establish their businesses outside of the U.S., drawing capital and economic growth away from the U.S. to the benefit of other countries.”
Responsible Digital Asset Advertising Act: Meanwhile, Sens. Kyrsten Sinema (I-AZ) and Cynthia Lummis (R-WY) introduced a bill setting advertising standards and disclosures for crypto companies. Among other things, the Responsible Digital Asset Advertising Act requires crypto companies to:
Notably, Sens. Sinema and Lummis co-chair the Financial Innovation Caucus, which aims to highlight responsible innovation in the U.S. financial system. While the bill serves as a marker of potential guardrails down the road, it’s not expected to move forward in Congress in the near-term.
Next steps: The House Financial Services Subcommittee on digital assets and the Agriculture Subcommittee on digital assets will hold a joint May 10 hearing on digital asset regulations.