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The Chair of the Senate Finance Committee is looking into the “lack of protections” in crypto tax incentives

Senator Wyden’s latest attempt for regulatory clarity aims to ensure that economically challenged regions obtain promised advantages from crypto mining operations.

Democratic Senator Ron Wyden is conducting an investigation into the behavior of cryptocurrency companies that take use of the Opportunity Zone tax advantages.

Senator Wyden’s primary issue derives from the assumption that certain cryptocurrency companies may be abusing the Opportunity Zone program’s “lack of protections and transparency requirements.”

He expressed his worries in letters to two companies and one individual. He wants to know how they are providing the reciprocal support needed under the program’s guidelines for low-income neighborhoods.

The Oregon Senator issued letters to cryptocurrency miners Argo Blockchain and Redivider Blockchain, as well as to an accountant specializing in Opportunity Zones at accounting firm HCVT Blake Christian.

The Opportunity Zones initiative was launched in 2017 with the goal of incentivizing businesses that create jobs and attract private investment to economically challenged areas.

Wyden requested information from Argo and Redivider regarding their involvement in the Opportunity Zone program and when they began. He also requests information on the number of employment created by their operations, which is one of the program’s primary goals.

Democratic Senator Ron Wyden is conducting an investigation into the behavior of cryptocurrency companies that take use of the Opportunity Zone tax advantages.

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Argo Blockchain CEO Peter Wall stated explicitly in July that the Dickens County, Texas, location of his company’s mining operation was chosen precisely due to its inclusion in the Opportunity Zone and plenty of renewable energy. He told Cointelegraph at the time that he hoped the facility might “revitalize the neighborhood through employment development,” which is one of Senator Wyden’s primary priorities.

Wyden cast doubt on Redivider’s genuine motivation for operating within the Opportunity Zone, citing a February 2022 interview with Huffpost in which CEO Tom Frazier stated that his business would have established a mining plant regardless of the tax benefit. At the moment, Redivider’s $250 million Opportunity Zone fund is exclusively available to authorized investors.

Senator Wyden wrote to Christian requesting information on the crypto mining projects in the Opportunity Zone in which his clients are now investing and the number of employment created by those enterprises. Wyden referenced the same Huffington Post interview in which Christian stated that his customer investors were simply “searching for a method to save money because they’re about to get pounded on short term capital gains taxes.”

This implies that his clients are merely searching for a strategy to offset short-term capital gains taxes by investing in tax-exempt mining businesses.

Argo, Redivider, or Blake Christian have not yet responded.

Wyden’s renewed drive for clarity in the crypto business may be indicative of what Blockchain Association Executive Director Kristen Smith described in a March 26 tweet as a “bipartisan mood shift on crypto” in the Senate. According to her analysis, both houses now have “progressive, libertarian, moderate, conservative, and liberal” support for crypto.

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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