Ron Wyden, a Democratic Senator, has expressed concerns about some crypto companies taking advantage of tax breaks provided in the “Opportunity Zone program”. He called out a lack of safeguards and transparency measures in this initiative.
The Opportunity Zone program offers a very effective solution for deferring gains. It allows investors to diversify into real estate or operating businesses – but investors are mainly interested in crypto and blockchain. It should be noted that these incentives are meant to spur investment in economically distressed areas. Crypto investors and companies are interested in re-investing or diverting their gains into additional crypto assets.
Wyden sent letters to Redivider Blockchain Opportunity Zone Fund LLC, HCVT LLP, and Agro Blockchain to respond to questions on crypto mining projects in Opportunity Zone that they or their clients have invested in. He believes the companies may be seeking to avoid taxes without meaningfully benefiting distressed communities using the program.
Since 2019, more than 6,000 funds have invested around $29 billion in Opportunity Zones. The Democratic Senator had introduced legislation to tighten the rules around the Opportunity Zones – requiring more reporting in an effort to increase transparency. The Opportunity Zone program was introduced in 2017 to offer tax incentives to companies that bring about job opportunities and private investment into economically distressed communities.
Experts say Senator Wyden’s push for clarity and transparency in the crypto industry is likley a bipartisan vibe shift on crypto in the government.