Crypto industry faces $30 billion tax threat from infrastructure bill
It's finally "Infrastructure Week" and Congress is hammering out the details of a $1 trillion bill inching closer to the finish line. But one area that could face unpleasant consequences from the bill is cryptocurrencies.
Why it matters: Nearly $30 billion in taxes from cryptocurrency transactions, as part of the bill's "pay-fors," is at stake.
Driving the news: In an updated text of the bill, senators have narrowed the definition of "brokers" that would fall under the new transaction reporting requirements, but it's still not specific enough, according to industry insiders.
- The new version defines a broker as "Any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person."
- The worry is that even the new definition still doesn't explicitly (or more clearly) exclude parties like miners, node operators, and software developers.
- "Such a requirement is essentially forcing miners, lightning nodes, etc., to identify others on the network," Coin Center executive director Jerry Brito tweeted. "Not only is this nonsensical from a technical perspective, such a mandate would very likely be unconstitutional surveillance."
Between the lines: This is yet another example of the cryptocurrencies only getting attention from lawmakers when they want something. The industry has been clamoring for clearer regulations and laws, and a slew of bills have emerged over the years, but things today are far from a neat and comprehensive set of rules.
- Moreover: While many a hearing on the topic has included dramatic accusations by lawmakers that cryptocurrencies are only used by criminals or "a crock," the current situation shows that more members of Congress should have a solid understanding of how things work.
- The industry's got a few champions in Congress, but it can't be comfortable knowing that most don't understand its fundamentals, or don't even want to.
What's next: Senators will now begin a dayslong amendment process—so there's still an opportunity for the cryptocurrency industry to get the tweaks it wants.