Biden Infrastructure Bill: Bad Cryptocurrency Provisions
The Biden administration’s infrastructure bill is loaded with initiatives and policies that have little to do with building roads and bridges. One of the particular inclusions in Bill Biden relates to cryptocurrency brokers. The âinfrastructureâ bill contains language that seeks to regulate crypto brokers in order to generate greater tax revenue. Unfortunately, this would also greatly increase the powers of the supervisory state in the process.
The trillion dollar price tag attached to the bill is staggering. Currently, there is no good plan to foot the bill. However, the administration seeks to generate revenue by taxing digital assets. To do this, the government is looking to expand asset reporting requirements for those who deal with cryptocurrencies. According to a fact sheet, this push should add $ 30 billion in government coffers.
However, the language of the new legislation is quite vague and opens the door to potential abuse. the the text itself reads: âAnyone who (for a fee) is responsible for regularly providing a service that transfers digital assets on behalf of another personâ would be treated as a broker.
According to Electronic Frontier Foundation, these newly ranked brokers would have significant reporting requirements:
These newly defined brokers would be required to comply with IRS reporting requirements for brokers, including filing Form 1099 with the IRS. This means that they should collect data about users, including the names and addresses of the users. . . . The mandate to collect the names, addresses and transactions of customers means that almost any business, even tangentially related to cryptocurrency, can suddenly be forced to monitor their users.
Since the requirements brokers must meet are important, the fact that the definition of a broker is so vague is frustrating. Yahoo reports that some fear that there is no limit to who can be investigated:
Kristin Smith, executive director of the Blockchain Association, told CoinDesk that the language project could mean that a number of people interacting with crypto may have to start reporting their transactions.
âWe interpret this to mean software wallet developers, hardware wallet makers, multisig service providers, liquidity providers, DAO token holders and potentially even miners,â she said.
Due to the many uncertainties, it is simply not clear how this kind of legislation would work in practice. Since crypto miners verify individual Bitcoin transactions, it is entirely possible that individual miners could be held accountable as a broker. The administration says it has “without intentionTo sue ordinary citizens, but promises to “trust me” are not very reassuring.
The vague language of the current cryptocurrency bill will create more problems than it solves. The cryptocurrency industry is inherently unpredictable, and the government is not adept enough to regulate the ever-changing crypto market. Instead of worrying about whether small brokerage firms and mainstream cryptocurrency miners get away with a little tax evasion, politicians should worry about bigger issues, such as their own extravagant spending.