Why Does The Crypto Community Care About The U.S. Infrastructure Bill?
- The new infrastructure bill includes an amendment that would make all crypto service providers register as broker-dealer entities and report filings to the IRS.
- This would impact you and the crypto community because it could cause many companies and leaders in the crypto industry to leave the country as it would regulate and tax the industry in an unfair way.
- Based on the crypto community’s response it’s clear more discussion is needed.
In case you haven’t heard or don’t follow news from the U.S. government, the U.S. Congress is in the midst of voting on a $1 trillion infrastructure bill. President Biden originally had plans for a $2.25 trillion infrastructure bill as part of wider efforts to improve the roads and bridges in the U.S. and provide jobs during the coronavirus pandemic. However, a bill that size was unable to get Republican support, so a $1 trillion bipartisan infrastructure bill was drafted and is now making its way through the halls of Congress.
The White House has described the bill as a “once-in-a-generation investment in our infrastructure”, but what exactly is included in the bill?
The U.S. Infrastructure Bill: What’s In It?
The primary reason for the bill is to provide funding to improve the nation’s roads and bridges and other infrastructure-related projects, but a lot more has been included in the bill as well. This includes money for transit and rail, an upgrade to the nation’s broadband infrastructure, upgrades to airports, ports, and waterways, and funding for electric vehicles. It also includes money for improvements to power and water systems and money for environmental remediation.
That’s Not All…
New tax rules were included in the bipartisan infrastructure bill that would impact the cryptocurrency community. A proposal in the infrastructure bill would require that cryptocurrency exchanges and other entities in the space defined as “brokers” report digital asset transactions to the Internal Revenue Service. The provision was included as a way to raise revenue for infrastructure projects and address concerns that crypto traders don’t pay their fair share in taxes.
The Problem The Crypto Industry Had With The Infrastructure Bill
Digital currency supporters, leaders, and lobbyists viewed the tax proposal as a threat to the existence of the crypto industry in the U.S. The concern was that the definition of “brokers” would end up including people who would not be able to comply with the rules, such as developers and miners, who help validate cryptocurrency transactions. They also felt that it would threaten the DeFi movements ability to develop and evolve.
Taking Action
Members of the crypto industry, led by companies like Square and Coinbase, lobbied Congress to change the bill, and were able to win over Senator Ron Wyden, the Senate Democrat responsible for writing tax legislation, who along with some of his colleagues, offered an amendment to the tax reporting rules in the bill so they would not include developers and miners.
A counter-amendment was then developed by the Biden Administration and others in favor of the tax rules included in the bill. The crypto community mobilized in support of changes proposed by Wyden and his colleagues, but those changes were ultimately blocked in the U.S. Senate. As of Monday, August 9th, legislators were still working with the Treasury Department to resolve the situation with the two competing amendments and come to an agreement on how to define a“broker” and who would be included in that definition.
This was the first time the crypto industry has been tested by the U.S. government in this way, and the industry was able to mobilize and lobby congressional leaders. Although the amendment to the bill supported by the crypto industry was blocked, a compromise is being worked on, proving that the industry has significant influence even within the government.
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