Updated: Feb 23
This past week, Senate Republicans and Democrats unveiled their $1.2 trillion “infrastructure” bill. With the massive price tag, lawmakers hope to offset some of the cost of their omnibus, 2,702-page legislation by including a roughly $30 billion tax on cryptocurrencies.
Due to the fact that the overall infrastructure bill is so expensive, it has to include a huge way to pay for it — in other words, provisions must be required in this bill that will generate revenue for the government to offset their new spending, making the cryptocurrency industry an innocent bystander that became the target. 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.
This portion of the bill and its attack on the cryptocurrency world is not only bad but it would ultimately undermine American leadership within the crypto industry and harm American jobs at the same time. If passed into law with the existing language, the bill could deter innovators and investors from doing business with digital currencies in the United States and force some companies to shut down or move off shore. For the United States to maintain its global leadership in the advanced technologies sector, we must encourage the development of blockchain technology. Given its global implications, blockchain might soon be considered “critical infrastructure” within the new digital economy.
Make no mistake: there is a clear and substantial harm in ratcheting up financial surveillance and forcing more actors within the blockchain ecosystem to gather data on users. Including this provision in the infrastructure bill will:
• Require new surveillance of everyday users of cryptocurrency
• Force software creators and others who do not custody cryptocurrency for their users to implement cumbersome surveillance systems or stop offering services in the United States
• Create more honeypots of private information about cryptocurrency users that could attract malicious actors
• Create more legal complexity to developing blockchain projects or verifying transactions in the United States—likely leading to more innovation moving overseas.
Congressman Ted Budd (R-NC) said lawmakers should follow pro-crypto lawmakers’ examples like Senator Cynthia Lummis (R-WY), an advocate for cryptocurrencies, who wants to fight for American dominance in the cryptocurrency sector and achieve “regulatory clarity” in an effort for these companies to prosper.
Within the last year we have witnessed established and traditional financial institutions weaponize their power against conservatives. Between high-profile conservative activists getting banned from payment processing apps and organizations like the New York Times actively calling on banks to cease facilitating the sale of firearms they think should be illegal, life has become fraught with liberal activism masquerading as corporate policy.
With the cryptocurrency world, and its lack of centralized control over its use, cannot be leveraged in the same way as traditional banking. If and when the industry becomes a common medium of exchange in our day to day lives, it would inoculate conservatives against the efforts of wild and out of control woke corporations.
According to the Chamber of Digital Commerce, the use of cryptocurrency is growing: almost 30% of Millennials and 15% of Americans have adopted digital currencies. These digital currencies can be used to pay for goods and services from businesses such as Microsoft and Overstock, or to trade just as any other currency or commodity. Furthermore, roughly 33% of U.S. businesses large and small accept cryptocurrency for payments.