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U.S. Senate Democrats are finalizing a plan to close a tax loophole used by many companies, and they want to use those revenues to shore up the government-run Medicare healthcare program for the elderly and disabled, sources familiar with the discussions said on Thursday, Reuters reported. Democrats expect to submit legislative text to the Senate parliamentarian in coming days, said one source, who asked not to be identified in order to discuss the private negotiations. The tax change is aimed at the majority of businesses in the United States that are known as "pass-through" firms that are not subject to the corporate income tax and instead have their income reported to the government on individual tax returns, subjecting them to the lower tax rates. Under the proposed changes, individuals who make more than $400,000 annually and couples who make more than $500,000 would have to pay a 3.8% tax on earnings from their pass-through business income. The fund that finances Medicare is currently set to be depleted by 2028. Democrats expect their pass-through tax proposal will amass $200 billion and would help make the trust fund solvent until 2031.

A wave of notoriously risky cryptocurrency firms could one day be integrated into the traditional banking system under a little-noticed provision in a new bill that is raising alarms among financial experts about potentially destabilizing consequences, the Washington Post reported. The provision — part of a sweeping proposal to regulate the crypto industry that Sens. Cynthia M. Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) introduced in June — would force the Federal Reserve to grant so-called master accounts to certain crypto firms seeking them from the central bank. The accounts give holders access to the Fed’s payment system, allowing them to settle transactions for clients without involving a separate bank. Two Wyoming-based crypto firms championed by Lummis stand to benefit. Both companies, Custodia Bank and Kraken Financial, have been stymied over the last two years in bids to gain Fed master accounts. But financial regulators and experts say the measure’s impact would cascade through the industry and beyond. The push by crypto firms to join the banking system’s central plumbing comes at a fraught moment for the industry and its regulators. A steep sell-off in cryptocurrencies has erased $700 billion from the digital asset market since early May, forcing a reckoning for some previously highflying start-ups. One such firm, Celsius Network, halted withdrawals last month, citing “extreme market conditions” as it froze as much as $8 billion in deposits.

Wall Street regulators must do more to address market risks highlighted by the "meme-stock" trading frenzy of January 2021 that pitted individual GameStop Corp investors against powerful hedge funds, a congressional report said Friday, Reuters reported. Meme stock trading — where companies see their value fueled more by social media attention than fundamentals continues — with cosmetics maker Revlon Inc. the latest example. The report by the U.S. House of Representatives' Financial Services Committee singled out Robinhood's trading app for "troubling business practices" and urged regulators to step up scrutiny of retail brokers. Robinhood said there was "nothing new" in the report, that it took "the appropriate and responsible steps necessary to protect and support our customers" and has made significant improvements since then. The report, which raises pressure on regulators to do more, also called for new brokerage liquidity rules and for regulators to hasten a crackdown on the "gameification" of trading — game-like features that prompt users to trade more. "The meme stock saga has raised questions about how retail trading market infrastructure currently operates and whether it is appropriately designed and regulated," the report said. The report, which was prepared following hearings in February 2021, analyzed how quickly money was made and lost when GameStop shares surged more than 1,600% in January last year before collapsing.

A bipartisan group of lawmakers cleared a major hurdle this week to advance what they call the most significant revision to America’s anti-money laundering laws in 20 years, the Washington Post reported. The bill, called the Enablers Act, amends the 52-year-old Bank Secrecy Act to require for the first time that trust companies, lawyers, art dealers and others investigate clients seeking to move money and assets into the American financial system. Those covered by the law, who include financial advisers and art and antiquities traders, would also be required to report suspicious activity to the Treasury Department. Real estate transactions would not be covered by the law, however. Banks are already required to vet their clients and their sources of wealth, but other American financial gatekeepers have been exempted from “due diligence rules” — a loophole long criticized by financial crime experts and international watchdogs. “Middlemen in foreign transactions should be subject to the same anti-money laundering checks as banks, and this brings us one step closer,” said Rep. Joe Wilson (R-S.C.), who co-led the push to enact the Enablers Act, along with Rep. Tom Malinowski (D-N.J.), and sponsored its inclusion in the defense bill. “Nobody should be able to hide behind blood money to exploit democratic institutions for their benefit.” The House Armed Services Committee voted on Wednesday to include the Enablers Act in the National Defense Authorization Act, a broad national defense policy bill that is traditionally passed by Congress every year. The voice vote fast-tracks the bill and significantly increases the likelihood it will become law, Democrat and Republican backers say.