Finally getting over the line, the bipartisan infrastructure bill was signed by President Biden this week. As with most bills relating to infrastructure, it mainly focuses on the traditional sort: roads, bridges, and the like. Adapting for the 21st century, it also includes provisions for superfast broadband connections in an attempt to level-up connection in the US.
But there are also some other further reaching stipulations. While certainly not traditionally infrastructure, cryptocurrency has been hit in the crossfire as the US government seeks to regulate one of the last unregulated markets. The plans hope to bring in tens of billions of dollars more in tax revenue, and predictably ‘crypto bros’ are not best pleased.
What are the provisions in the bill?
Starting in 2024, cryptocurrency ‘brokers’ will be required to record transactions, tracking them for customers and the Inland Revenue Service (IRS). They’ll have to disclose the names, addresses and phone numbers of their customers, the gross proceeds from sales and any capital gains or losses.
In conjunction with this, businesses that receive payments of $10,000 or more in crypto must report the identity of the sender to the government, mirroring a similar anti-money laundering rule for cash transactions of that amount.
These measures are expected to bring in $28 billion in extra tax revenue, as the IRS will have the power to tax the transactions that it previously did not. While inland revenue will be overjoyed by this news, crypto investors are not.
What pushback has there been?
With the crypto changes only coming into effect in three years, there is time and scope for lawmakers to change the rules.
Crypto advocates say the language defining a crypto ‘broker’ is too broad. It could mean that crypto miners and software developers might be expected to report information that they can’t access to the IRS. It would change the way that the crypto sector is formulated, and lawmakers, particularly Republicans, say they do not want the industry to have unnecessary weight holding it back.
Two Republican senators, Ron Wyden and Cynthia Lummis are trying to change the bill’s definition of digital asset brokers to exclude cryptocurrency miners, stakers, wallet providers, and blockchain software developers, so that they would not be responsible for filing customer data to the IRS. They say this would protect investors data, a major part of the lure of cryptocurrency.
Texas Republican Ted Cruz wants to go further. He has a bill that would repeal the crypto section from the infrastructure law entirely.
“The Lone Star State has quickly emerged as the main hub for the cryptocurrency industry, and that exciting industry is now in danger of being stifled and driven overseas by an overreaching provision in this newly-signed, reckless spending package,” says Senator Cruz.