Joe Biden Signs $1T Bill That Could Weaken Crypto
President Joe Biden has signed a $1 trillion infrastructure package into law, which includes new cryptocurrency transaction reporting rules that many in the sector believe are unrealistic and may stifle anything from mining to decentralised exchanges.
The section in question broadens the definition of brokers who must disclose to the Internal Revenue Service any transaction worth more than $10,000. (IRS). It asked $28 billion in funding to help pay for the measure.
Personal identifying information — essentially anti-money laundering and Know Your Customer data — of the individual performing the transaction must be included in the reporting.
Unfortunately, the definition was so wide that it included bitcoin miners and validators, node operators, software developers, and leaderless decentralised exchanges, in addition to the genuine brokers and exchanges it targeted. None of them is capable of gathering the information needed.
A broker is defined as “any individual who (for a fee) consistently offers any service responsible for effecting digital asset transactions, including any decentralised exchange or peer-to-peer marketplace.”
The clause was widely acknowledged as being badly designed in Congress – 99 senators voted to change the wording before submitting the infrastructure package to the house, but one, Sen. Richard Shelby, opposed it for unrelated reasons, thereby killing the bill.
Given the ferocity of the political battle over the bigger package, there wasn’t enough time in the House to amend the clause.
A Lot of Fuss About Nothing
According to Stephen Palley, co-chair of the law firm Anderson Kill’s blockchain and virtual currency practise, the fear about the bill’s phrasing may be overstated. He told CNBC in August: “Even if the bill passes the House, which is doubtful, the wording is vague, and there is evidence on the floor that the objective is not to put reporting obligations on infrastructure providers. Who knows how the implementing rules will appear, and if they’re awful, they’ll almost certainly be challenged in court.”
He went on to say that the phrasing might be read to catch Internet and telecom service providers:
“There’s no way the words could be understood in that way.”