What Does the Cryptocurrency Portion of the Infrastructure Bill Mean for Crypto in the United…

Recently, the first step towards the taxation of cryptocurrencies was taken in the United States. Specific wording in the U.S. infrastructure bill would require almost everyone in cryptocurrency, including miners, stakers, wallet creators, and DeFi developers, to perform KYC on their users, which is nearly impossible. Fortunately, there are still many years until this would go into effect, and many opportunities for the legislation to be changed.

The United States is beginning a push towards the regulation and taxation of cryptocurrencies in an unorthodox manner. Instead of holding hearings, getting expert opinions, and drafting a bill, politicians snuck crypto legislation into the infrastructure bill, which is a large bill that describes what the United States will spend money on and where the money will come from.

The infrastructure bill covers topics like highway and road spending, military spending, and broadband connectivity. In total, these improvements will cost the government $1 trillion and will be paid through taxes. Cryptocurrencies, which up until now have had no tax guidance in the United States, were chosen to be included as a way to generate an estimated $28 billion in tax revenue.

The section in the bill reads that brokers of digital assets will need to report tax information, and defines a broker as “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”

The main problem with this sentence is how vague and broad the definition of a broker is. Currently, this could include exchanges, miners, staking delegates, and even hardware wallet manufacturers. For entities like delegates, who only know the address of their delegators and nothing else, this type of law would be impossible to enforce, as it would require the delegate to send tax documents to every single person who delegated their cryptocurrency to them. Not only is this absurd, but also is impossible to properly enforce. It would effectively destroy the cryptocurrency industry in the United States, as nobody would be able to follow the laws and would have to choose between shutting down or going to jail and paying fines.

With many high-profile investors and tech giants opposing the bill, like Elon Musk, Jack Dorsey, and Mark Cuban, there is a lot of pressure on politicians to change the wording as soon as possible.

There were proposed amendments to the bill, namely by Senators Lummis, Toomey, and Wyden, but they were objected to by Senator Shelby, who receives nearly half a million dollars in donations from banks.

Even though this bill, which is now officially passed by the Senate, would be devastating for the crypto industry, there is still a long way to go before the bill is officially law. First, the bill has to pass through the House of Representatives, where it will be scrutinized and changed by over 400 politicians. It is likely that someone in the House will want to change the bill to be more accepting of cryptocurrencies, as it would be a massive popularity boost, especially with an election cycle happening next year.

Even after the bill passes through the House of Representatives, there is still opportunity for it to be changed over the coming years. This is likely, as the SEC and other regulatory bodies will begin issuing regulation on the cryptocurrency industry in 2022, which will likely overturn or clarify the definition of a broker. The current chairman of the SEC, Gary Gensler, is an MIT blockchain professor, so he should know how unenforceable this law is and that it will need to be changed.

Finally, if all else fails, this law will not go into effect until 2023, which would give all crypto companies and entities ample opportunity to work around the legislation or move to different countries entirely.

Even though this legislation seems incredibly negative for the cryptocurrency industry, it is likely that something will happen in the next couple of years that will fix the problems of the bill, and the government will take a more crypto-friendly stance. With cryptocurrencies being researched and adopted around the world, the United States will be lagging behind if they do not take initiative to adopt and accept cryptocurrencies, along with the billions of dollars they bring to the country in the form of jobs and taxes.

By Lincoln Murr

Source: https://bitpushnews.medium.com/what-does-the-cryptocurrency-portion-of-the-infrastructure-bill-mean-for-crypto-in-the-united-18f1531a8b77?source=rss——-8—————–cryptocurrency