On August 10, the U.S. Senate passed a $1.2 trillion bipartisan Infrastructure Bill.
The bill covered everything from repairing roads to upgrading our power grids to expanding internet access to building EV chargers.
Remarkably, the infrastructure part of the bill wasn’t the biggest story.
Instead, a provision to pay for the bill created a ruckus. That provision targeted tax compliance in the cryptocurrency industry.
The contents of the bill, as written currently, could completely shake up the industry as we know it. But the fight against the provision isn’t over. And there’s still time to make a difference.
Today, I’ll explain why we’re still bullish about bitcoin and crypto despite the bill’s passage in the Senate.
Plus, I’ll tell you how cryptocurrency advocates like you can fight back against what we believe is draconian overregulation of the crypto ecosystem.
Facing a Fight in the House
We first touched on this issue in Monday’s Daily, but here’s a quick refresher…
The infrastructure bill contained a passage that could impose strict regulations on crypto participants. Organizations that fall under the following descriptions would be classified as a cryptocurrency “broker”:
“Any person who (for consideration) is responsible for regularly providing any service effectuation transfers of digital assets on behalf of another person.”
A broker is a firm that is licensed to buy and sell securities on exchanges on behalf of its customers. Think of Fidelity or TD Ameritrade.
Brokers need to note and produce records of transactions that they facilitated for tax reporting purposes. This includes the identity of the investor… what they bought/sold… and how much they made.
For cryptocurrency exchanges, like Coinbase, Gemini, and eToro, it would be business as usual.
Broker-dealers and asset managers in the crypto industry already conduct know-your-customer (KYC) compliance, anti-money laundering (AML) compliance, and tax reporting.
So, it won’t be much more work to comply with the new requirements… But the provision as written now is overly broad.
It would ensnare much of the crypto ecosystem: miners, developers, validators, node operators, wallet providers, and even decentralized autonomous organizations (DAOs)…
But these entities are not cryptocurrency brokers at all.
It’s like asking the developers who write the software for Fidelity or TD Ameritrade to track the people making trades.
They’re entirely incapable of reporting on the transaction histories of their users due to the nature of their business.
These organizations have no clients. They simply provide a service to keep the blockchain growing. They have no technical way of complying with the proposed regulation.
This may sound onerous for crypto… but let me show you why the fight isn’t over yet.
Politicians Across the U.S. Support Crypto
First, Bloomberg is reporting that the U.S. Treasury is already working to clarify its definition of a digital asset “broker” to exclude entities like crypto miners and software developers.
The Treasury hasn’t officially confirmed Bloomberg’s reporting. But it did back an amendment to the bill that aimed to address this issue.
We’ve also seen several Representatives support amending the bill, including Rep. Patrick Henry of North Carolina, Rep. Anna Eshoo of California, and Rep. Tom Emmer of Minnesota.
It’s up in the air whether the House will succeed in amending the crypto provision… But if it fails to do so, there will be other opportunities as a part of other legislation.
Meanwhile, on the state level, governors like Jared Polis of Colorado and Greg Abbot of Texas have taken steps to make their states more crypto-friendly.
And on a local level, Miami mayor Francis Suarez has worked hard to turn Miami into a crypto hub… Not to be outdone, heavily favored New York City mayoral candidate Eric Adams said he’d like the Big Apple to become the “center of bitcoin” under his leadership.
So we’re seeing pushback from politicians at all levels to this bill… an encouraging sign. And Daily editor Teeka Tiwari thinks even more politicians will be joining them.
Here’s Teeka…
The government isn’t looking to kill crypto, they are looking to tax it. And you can’t tax a corpse (death taxes aside, of course).
My point is I expect the long-term greed of politicians to guide their actions in defining the term “broker” in a way that allows them to shove their snouts in the crypto feeding trough without destroying it. So, for now, I wouldn’t worry too much about it.
Ultimately, what has played out over the past week makes us more bullish than ever over the state of cryptocurrency in the public consciousness.
And the provisions in the infrastructure bill, should it pass, won’t take effect until 2023… This leaves ample time for new discussions, advocacy, legislation, and court litigation if necessary.
You Can Make a Difference, Too
Outside of politics, we’ve also seen pro-crypto grassroots advocacy grow in intensity…
Fight for the Future, a digital rights group, helped encourage over 40,000 people to call their senators and tell them they support exempting these crypto entities from the bill.
So, if you’d like to join them, here’s how to contact your legislator…
STEP 1: Identify Your Representative. You can enter your zip code here to find your representative in the House… Once you have that information…
STEP 2: Call Your Representative. You can find the House telephone list here.
STEP 3: Speak Out. Share your concerns about the current infrastructure bill’s crypto provisions.
Grassroots efforts to push pro-crypto legislation are growing bigger and more sophisticated than ever… And this is without the massive organizational power and wealth that other lobbying groups have.
We remain confident that the cryptocurrency community will play a significant role in educating Congress and eventually fixing this bill… including readers like you.
So if you believe in the democratizing and disruptive power of crypto as much as we do… we encourage you to speak out against the infrastructure bill’s current crypto provisions.
Call or write your representatives today… and we’ll continue to keep you up to speed on the latest crypto news.
Regards,
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Grant Wasylik
Analyst, Palm Beach Daily
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