Last week, House Democrats drafted a new bill called the “Keep Big Tech Out of Finance Act.” This is a short bill obviously timed around the antitrust congressional hearings.
It’s designed to block large tech companies out of the financial services industry. Companies with global revenues of $25 billion or more can’t affiliate with a financial institution if they’re engaged in certain activities. (Examples include running an online marketplace, exchange, or platform to connect third parties.)
Clearly, this bill is targeting the Big Tech companies that recently testified in Washington: Apple, Amazon, Google, and Facebook. It’s a heavy-handed attempt to keep Big Tech from disrupting—and improving—the financial services world.
And it’s not a coincidence that the bill was drafted after Facebook announced plans to launch its Libra cryptocurrency.
Of course, I wouldn’t be surprised if financial services industry lobbyists were behind the bill. It’s designed to protect incumbents from tech companies’ innovations.
But this is always a terrible idea—and a great way to stifle economic growth. The fact is, over the last two decades, the financial industry has proven that we can’t trust it…
From rigging the London Interbank Offered Rate (LIBOR) to inflate the industry’s profits… to colluding with credit-rating agencies to mislead investors about mortgage-backed securities… to the robo-signing of foreclosures… to paying billions in executive bonuses after the taxpayer bailouts…
There’s a laundry list of transgressions from the Big Banks—and over $100 billion in fines levied against these guilty parties.
Simply put, we need competition in this space.
And we should keep in mind: This bill wouldn’t be limited to just the largest tech companies. It could potentially harm companies like Coinbase and Robinhood, too.
These are digital-first companies catering to consumers and not just the big players. They’re fully compliant. And they provide immense value to normal, retail investors.
We want these companies to continue innovating. We want them to remove the middlemen who add nothing but friction and unnecessary costs. We don’t want to slow these companies down…
We want them to flourish.
So this bill is an awful idea. And I expect it to die quickly. Even if it does pass in the House, I can’t imagine it getting through the Senate.
The reality is, Congress knows it has much bigger problems. Cryptos—including Facebook’s Libra—threaten the government’s “monopoly” on currency creation.
But the transition from fiat to digital assets is inevitable. Governments will have no choice but to adapt.
An IRS Crypto Crackdown?
And speaking of cryptos…
The Internal Revenue Service (IRS)—the U.S. government’s tax authority—may subpoena Apple, Google, and Microsoft to help find unreported crypto holdings.
The IRS wants data surrounding crypto wallet downloads. And those three companies have that data.
This comes from a massive, 181-page presentation leaked from an IRS cyber training session. Its goal is training IRS agents to find hidden crypto holdings.
This is scary stuff. It tells us that the IRS is getting aggressive. Ironically, the IRS hasn’t yet provided clear guidance on the tax treatment of cryptos. As a result, tax professionals don’t know how to deal with the nuances of filing taxes regarding crypto gains.
Most Americans want to file their taxes accurately. But this lack of clarity makes it difficult for crypto holders. So it’s a problem that the IRS wants to go after them anyway.
This has been a major focus of the Chamber of Digital Commerce. And it’s a big reason why I visited Washington last week.
We’re working hard to educate Congress about cryptos and digital assets. In conjunction with the Congressional Blockchain Caucus, the Chamber has also been trying to provide guidance to the IRS in hopes of clarifying tax filing requirements.
Now, we’ve made a lot of progress to this end—but we still have a lot more work to do.
Here’s what I can say to crypto holders…
Until we get more clarity, the smart assumption to make is that every time we sell a crypto (even just moving from one digital asset to another), it’s a taxable event. It’s very important for us to declare any gains from these sales on our tax filings.
I always recommend speaking with a tax accountant on these matters. And always declare any form of gains from any sale of a digital asset.
Editor, Exponential Tech Investor
P.S. While I’m working towards educating Congress on the benefits of cryptos, tech firms are also presenting us with another investment opportunity, too…
And I’ll be revealing all the details behind my system identifying the best ones that could hand investors life-changing gains. So be sure to tune in to my free special event tonight at 8 p.m. ET. You can sign up to attend right here.