The United States has long been considered a frontier for new technologies that are then being adopted by countries across the world. Perhaps that’s why everyone pays closer attention to how regulators and lawmakers look at crypto in the US. And the latest happenings haven’t been too positive. Recently, the US was discussing the Infrastructure Bill, and some of the proposed regulations might put the crypto industry back. So, what exactly does the bill proposes, and how are people in the industry looking at it? Answers to all that and more in this piece today.
What’s infrastructure bill connection with crypto?
The biggest question in your mind would be how does a $1.2 trillion infrastructure bill has a connection to digital assets? Well, the answer lies in the taxation aspect. As you’d know, all the large-scale infra projects like rebuilding bridges and roads require huge sums of money, and the lawmakers believe that by taxing cryptocurrency, they’ll be able to make good money. The bill expects to make $28 billion in the next 10 years.
What does the bill propose?
The infrastructure bill states that crypto brokers will have new tax reporting obligations to enable traders to buy and sell cryptocurrency.
What’s the problem with the proposed regulation?
Well, the problem lies in the terminology. The definition of a crypto broker is too broad or unspecified, the industry claims. Even miners (proof of work method) or validators (proof of stake method) would fall into this categorization. So while centralized exchanges like Coinbase will be liable to pay taxes, the decentralized exchanges can’t be taxed in this manner.
It goes without saying that the bill is fundamentally against the biggest tenet of digital currencies – pseudonymity.
What’s the current status of the bill?
We stand with @Square, @RibbitCapital, @coincenter, and @BlockchainAssn about the digital asset provision in the infrastructure bill. And we applaud @ronWyden @senLummis @senToomey in proposing a thoughtful amendment to get the tech right.
— Coinbase News (@CoinbaseNews) August 4, 2021
Read our official statement ↓ pic.twitter.com/YrkohsDny7
Well, this disagreement between what exactly is a crypto broker has put the bill in limbo. However, even some senators such as Finance Committee Chairman Ron Wyden (D-OR), Cynthia Lummis, and Pat Toomey have come out to support this, and so have exchanges like Coinbase and Square.
That’s not it. Even digital rights organizations like Electronic Frontier Foundation and Fight For the Future are slamming the bill.
What’s next?
Both the industry and senators are proposing these amendments to the bill. However, the industry is looking for an entire overhaul.
The interesting thing is that the industry is supporting cryptocurrency tax reporting, but it wants it to be done properly. Worth noting that the bill won’t go into effect before 2023, and we hope that crypto-specific provisions are amended by then.