In the United States, the Biden administration has been pushing forward a $1 Trillion Infrastructure Bill to fund much needed improvements across the country.
It would fund clean energy, transportation, and many other things I care about.
To top it all off with warm fuzzies, there seems to be lots of bi-partisan support on Hill to make sure it passes. Not every day you see America’s two parties play nice together!
But big spending bills need money to fund them. Some legislators believe that they can get $28 Billion from the blockchain/cryptocurrency industry by changing the definition of a “broker”.
From the EFF:
While the language is still evolving, the proposal would seek to expand the definition of “broker” under section 6045(c)(1) of the Internal Revenue Code of 1986 to include anyone who is “responsible for and regularly providing any service effectuating transfers of digital assets” on behalf of another person. These newly defined brokers would be required to comply with IRS reporting requirements for brokers, including filing form 1099s with the IRS. That means they would have to collect user data, including users’ names and addresses.
The broad, confusing language leaves open a door for almost any entity within the cryptocurrency ecosystem to be considered a “broker”—including software developers and cryptocurrency startups that aren’t custodying or controlling assets on behalf of their users. It could even potentially implicate miners, those who confirm and verify blockchain transactions. The mandate to collect names, addresses, and transactions of customers means almost every company even tangentially related to cryptocurrency may suddenly be forced to surveil their users.
This bill was clearly written by someone who doesn’t understand the technology or the industry. These blockchain technologies are by nature, secure, anonymized, and global.
The correct way to tax this industry is to monitor the on/off ramps when users take their crypto gains and convert them back into USD. Many inside the industry have been asking the IRS to do just that for years now.
The only thing this provision would accomplish would be driving the entire industry out of the United States.
Thankfully, there are a few senators that get it. A bipartisan amendment was proposed by Senators Ron Wyden, Cynthia Lummis, and Pat Toomey that would fix this language, keep the tax money flowing, and protect the industry.
For some political reasons I can only speculate on, this amendment isn’t getting the support it needs.
Do me a favor, call your senators, and tell them to support the amendment. I just did and it took less than a minute.
Be nice, pleasant and professional. It’s important that this hastily written draft doesn’t become law.