Privacy Tradeoffs in New Remittance Tax Could Accelerate Crypto Adoption
New tax proposal raises privacy issues while potentially driving more users to crypto for remittances
Welcome to the Wednesday edition of the Crypto In America newsletter!
The proposed 5% remittance tax tucked into the House’s “Big Beautiful" tax reform bill released on Tuesday is raising eyebrows among crypto advocates for its potential to ramp up government surveillance, but it’s also sparking interest in unintended consequences that could boost crypto adoption.
On the upside, the tax as currently drafted would not apply to peer-to-peer crypto transactions or impose new liabilities on developers of self-custody tools. That’s a meaningful win for those in the crypto space who’ve long been concerned about overregulation and government overreach in DeFi. It could also unintentionally incentivize more users to turn to crypto for remittances.
However, the tax presents a significant downside for users relying on traditional remittance providers like PayPal or MoneyGram. To avoid the tax, individuals would be required to identify themselves and use only 'qualified' remittance providers — entities that would operate under ambiguous standards set by the Treasury Department. Critics, including Coin Center’s Executive Director Peter Van Valkenburgh, argue that this could lead to increased data collection by these intermediaries, raising significant privacy concerns.
In a recent blog, Van Valkenburgh warns the tax could pave the way for a repeat of the Treasury’s 2020 "midnight rulemaking," which would force providers to collect personal data on individuals who are not their customers — something that could open the floodgates for even more invasive government oversight.
“No matter your position on the remittance tax as policy, the current implementation in the Big Beautiful Bill will penalize privacy, complicate compliance for law‑abiding exchanges, and push users toward self‑hosted crypto tools—which remain fully legal and, under this very bill, entirely outside the tax’s scope,” Van Valkenburgh writes.
Beyond implications for crypto, the new bill from House Republicans features several key campaign promises from Trump, such as eliminating federal taxes on tips, overtime pay, and car loan interest.
Patrick McHenry Sits Down with Crypto In America
In our latest episode, former U.S. Representative and House Financial Services Committee Chairman Patrick McHenry shares his insider perspective on the current state of U.S. crypto policy — now from the other side, as an advisor to the industry.
Here are some highlights from the interview:
When asked if President Trump’s family’s involvement in launching various cryptocurrency ventures would be the main obstacle to bipartisan crypto legislation, particularly when it comes to stablecoins, McHenry said the real issue isn’t Trump’s actions — it’s the absence of clear rules.
"If you think that the president's family is taking advantage of a loophole in the law, you don't understand the fact that there is no law. Go make a law so we have clear rules of the road for everyone to participate."
Despite past gridlock among the two parties, McHenry highlighted a shift in tone on Capitol Hill since his departure from the House.
“Republican leaders in the Senate and the House are working actively with Democratic members, even though there’s a Republican majority — they’re acting together.” He pointed to the collaboration between Senators Lummis (R-WY) and Gillibrand (D-NY) as an example, joking, “The Venn diagram is only crypto.”
McHenry emphasized that this kind of bipartisan engagement is rare in financial regulation, calling it “different than what we’ve seen out of financial regulation, at least in the last 30 years.”
On former SEC Chairman Gary Gensler, McHenry revealed that the outspoken crypto critic wasn’t nearly as anti-crypto behind closed doors as he appeared in public.
“You could have a very reasonable conversation with him — then he’d turn around and do the exact opposite. I think it had more to do with Senate politics, and confirmation politics.”
Catch the full episode with Patrick McHenry on all platforms here.
Midweek Recap
ICYMI. Here are some of the biggest stories so far this week:
Coinbase will replace Discover Financial in the S&P 500 index next week, becoming the first cryptocurrency company to be included in the index.
The Treasury Department kicked off a series of industry roundtables on Monday, beginning with discussions on crypto banking. The meetings will continue throughout the week, covering topics such as DeFi, stablecoins, and cybersecurity.
Israeli trading platform eToro priced its Nasdaq IPO at $52 per share, giving the company a valuation of $4.26 billion.
Robinhood will acquire top Canadian crypto platform WonderFi, affiliated with investor Kevin O’Leary, to expand its crypto services across Canada.
The SEC has delayed a new round of crypto exchange-traded product applications, including Grayscale’s proposed Solana ETF and BlackRock’s Bitcoin ETF, which seeks to offer in-kind (no cash) redemptions and creations.
Echoing President Trump, NYC Mayor Eric Adams says his goal is to make "New York City the crypto capital of the globe."
The U.S. has reached a temporary trade deal with China, agreeing to cut tariffs on Chinese goods from 145% to 30% for 90 days. In return, China will lower tariffs on U.S. goods from 125% to 10% for the same period.
President Trump has signed a strategic economic partnership with Saudi Arabia, as the kingdom announces a $600 billion investment commitment to the United States. Trump says he will also announce a new trade deal following his trip to the Middle East.
U.S. inflation dropped to 2.3% in April, lower than forecast amid the ongoing trade dispute.
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