Crypto Community Fights to Change ‘Unworkable Requirements’ in Infrastructure BillAugust 6, 2021
The cryptocurrency community has been rallying to change what are seen as “unworkable requirements” in the 2,700-page infrastructure bill caused by poorly-worded language that “could mean anything.”
Speaking to CNBC Own Lay, an analyst at Oppenheimer, has explained the problem is the definition of a digital asset “broker,” which in the bill is defined as any party “responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”
The poorly worded regulation, he says, could lead to expanding the reporting requirements applied to brokers and vastly increase operation costs, even though the wording “can mean anything.” The bill does not exclude miners, stakers, software developers, or other individuals in the cryptocurrency space with no customers.
The language hasn’t yet been altered by, according to Kristin Smith, executive director of the Blockchain Association, it may still be changed, even if through a later bill. The biggest worry surrounding it is that it could “detract people from wanting to invest or participate in crypto networks in the United States.”
In a joint statement the Blockchain Association, Coinbase, Coin Center, Ribbit Capital, and Square expressed concern over the language included in the infrastructure bill, as it will place “unworkable requirements on crypto technology.”
The statement details “brokers” could be miners, software and hardware wallet makers and others who don’t engage in trading. It would also make possible a “massive increase in financial surveillance, potentially requiring companies to report information about individuals even if they are not customers.”
Crypto lawyers including Jake Chervinsky, who’s currently working as the general counsel behind Compound, have been urging community members to call their senators and inform them they support the amendment proposed by Senators Wyden, Lummis, and Toomey.
In practice, your only options would be to shut down or move offshore. That’s what this bill threatens to do to U.S. crypto companies by forcing them to report information to the IRS that they don’t have and can’t get.
U.S. President Joe Biden has thrown his support behind an amendment to the bill that would subject a broad section of the crypto industry to onerous tax reporting obligations. The amendment in question would effectively favor Bitcoin over networks using Proof-of-Stake (PoS) consensus mechanisms, by excluding validators and developers working on Proof-of-Work (PoW) networks.
The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading cryptoassets comes with a risk of financial loss.
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