Introduction
It’s no secret that our government had always wanted to impose harsher regulations on cryptocurrencies to get a better grip on the nascent cryptocurrency industry. But since cryptocurrency also have ardent supporters in our government, doing so had been very difficult for them.
It was for this reason that in all these years, our government has yet to pass a bill that could truly be detrimental to the cryptocurrency industry. Unfortunately, it seemed that this was about to change with the passing of the new Infrastructure Bill.
Everyone Is A Broker
The new Infrastructure Bill despite not being about cryptocurrency has great impact to the industry in the US as whole due to unclear and hazy language used in the bill when describing a certain term.
How is the bill “unclear and hazy” you asked?
The bill itself wasn’t particular controversial or new as it was all about tax compliance and tax reporting. The thing about the bill that raises concern though was the unclear and broad definition of the word "broker."
In the new cryptocurrency bill anyone who “regularly provides any service responsible for effectuating transfers of digital assets” are considered brokers. And in the cryptocurrency industry, the terms used in the bill could loosely apply to pretty much everyone in the industry.
When people use the term brokers in the cryptocurrency industry, they are referring to exchanges like Coinbase, eToro, Voyagers, Gemini, etc. – entities that facilitate the buying and selling of cryptocurrencies. But in the new bill even developers, companies, and miners could be considered as “brokers.”
But what does it mean?
It means that developers, companies, and miners are now legally required by law to collect and report information on users to ensure that taxes are being paid properly. Such requirement is absurd as cryptocurrency uses a decentralized system that makes such a requirement impossible to fulfill.
How are developers and miners supposed to know who is making what transaction? Are they supposed to record the personal information of every single person using the blockchain to transact in cryptocurrencies? That would be impossible for them to do; moreover that was not their job in the first place.
Pad It and Hide It
The unclear definition of the term “broker” in the new Infrastructure Bill was already very controversial but it doesn’t stop there. Even the method used to pass the bill could also be considered as such.
If we are to describe how the new cryptocurrency bill passed in one word, the word “sneaky” would fit the bill perfectly. And here’s why.
Firstly, the Infrastructure Bill was all about bridges and roads and has little to do with cryptocurrency. If one heard the word infrastructure, the last thing that would come to mind would be cryptocurrency. Despite this though, it was still included in the newly passed Infrastructure Bill which also happened to have 2,702 pages in total.
Secondly, Biden’s Infrastructure Bill has 2,702 pages and for the new cryptocurrency bill to be simply slap dab into such a massive document meant that it could easily be ignored. I mean, let’s be honest here, just how many of the lawmakers present that day actually read the whole thing?
The new policy on cryptocurrency was just five pages long and was even found on page 2,433 of the bill. So unless senators knew specifically where to look, it’s easy for them overlook the aforementioned policy. And this does not include the fact that most politicians don’t truly understand the blockchain and cryptocurrency so even if they saw the new policy they won’t find anything strange about the bill.
I’m not saying that the new cryptocurrency bill will never be passed if it was presented on its own but there’s no way that it’ll pass as easily as it did if the bill was scrutinized properly. But since everyone was dealing with a massive document with more than 2,700 pages, the bill passes as very few have the patient to sit through all of it.
Thirdly, senate was dead set in passing the new Infrastructure Bill and as both the US Congress and Senate are currently controlled by a single party, the new Infrastructure Bill is set to pass no matter what. Even if the Biden administration added more to the Infrastructure Bill, senate would most likely still pass the bill.
It was these three reasons that made me label the US Senate passing of the Infrastructure Bill as “sneaky.” But the thing that really worries me the most was that this might become a trend which means that politicians could use this "sneaky" method to impose more regulations on cryptocurrency even if it’ll hurt the industry as a whole.
Closing Thoughts
The Biden administration’s new infrastructure project requires a ton of money so I understand why they wanted to ensure that taxes from cryptocurrencies are all accounted for. After all, they had claimed that they could get $28 billion from cryptocurrency taxes alone over a ten year period.
That being said, $28 billion is just a drop in the bucket if one is to consider that it was a trillion dollar ($1.2 trillion in some sources) project. So in my opinion the new policy is really more about control than anything else.
The silver lining in all of this was the fact that the bill has now moved to the House of Representatives which mean that some amendments could still be made on the bill. So it’s still possible to clarify the definition of the term “broker” and avoid future troubles cause by this slapdash policy.
Thank you for reading.
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Disclaimer: This article was double checked using Grammarly's Plagiarism Checker to ensure originality.
My other articles: https://read.cash/@beastion
Like you I am curious to see what the house will do with this bill. I guess for now we just wait and see....