The “Infrastructure” Bill Could Crush the Cryptocurrency Sector
Congress’s “infrastructure” bill could significantly harm the crypto sector and create undue hardships on those who participate in it.
Federal regulation of cryptocurrencies has always been an inevitability. With the crypto sector having a market capitalization of nearly $2 trillion, it was just a matter of time until the U.S. government decided to subject it to taxation and regulation. Though the idea of taxes is irksome, it’s not surprising. But few expected the bombshell amendment that currently has the crypto space up in arms.
What originally sparked controversy regarding these amendments was the definition of a “broker.” Originally, the bill defined 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.”
Many in the crypto world recognized how broad and problematic this definition was. If this definition were to be adopted, crypto miners, developers, and stakers, in addition to those facilitating Cardano Stake Pools and similar options, would now have to comply with Know Your Customer (KYC) requirements and file a type of 1099 form. This would create undue hardships on those in the crypto sector as many people, myself included, do not have access to the information required to comply with these requirements.
On Thursday, Senators Mark Warner (D-Virginia) and Robert Portman (R-Ohio) proposed an amendment to the bill to change the definition of broker. Under this proposed amendment, the exclusions to the previous definition of broker would be those “validating distributed ledger transactions through proof of work (mining), or selling hardware or software the sole function of which is to permit persons to control a private key (used for accessing digital assets on a distributed ledger).” Again, this still creates an Atlas level burden on many within the crypto space. This means that, if someone creates a decentralized application, creates a cryptocurrency, or validates transactions through proof of stake (what LOOPS Pool, Tezos Pools, and many other cryptocurrency do), they would not be excluded from these requirements.
Many on Twitter argued that this amendment didn’t go far enough, while others saw this as the government effectively deciding winners and losers:
While I appreciate that my colleagues and the White House have acknowledged their original crypto tax had flaws, the Warner-Portman amendment picks winners and losers based on the type of technology employed. That’s horrible for innovation.
— Senator Pat Toomey (@SenToomey) August 6, 2021
Still others pointed out that this amendment punished those using proof of stake (a greener option) over proof of work (a much more energy intensive method):
The Warner-Portman-Sinema amendment provides a government-sanctioned safe harbor for the most climate-damaging form of crypto tech, called proof-of-work. It would be a mistake for the climate and for innovation to advance this amendment. https://t.co/Ppn5BpoYSX
— Ron Wyden (@RonWyden) August 6, 2021
So the whitehouse that is against global warming supports the amendment that increases energy consumption over the one that doesn't? Proof of Stake is the green path forward. Mining isn't. https://t.co/3n7jJWASpz
— Charles Hoskinson (@IOHK_Charles) August 6, 2021
On Friday, August 5th, Senators Ron Wyden (D-Oregon), Pat Toomey (R-Pennsylvania), and Cynthia Lummis (R-Wyoming) introduced an amendment to the “infrastructure” bill that would expressly exclude from being defined as a broker any individual who:
- validates distributed ledger transactions;
- sells hardware or software for which the sole function is to permit a person to control private keys which are used for accessing digital assets on a distributed ledger; or
- developing digital assets or their corresponding protocols for any use by other persons, provided that such other persons are not customers of the person developing such assets or protocols.
Though few want regulations on the cryptocurrency sector at all, the latest version of the amendment seems to be the most ideal. The original bill would create unnecessary and complex legal hurdles for those wanting to jump into the cryptocurrency sector. However, with the updated language in last Thursday’s amendment proposal being far less sweeping in who counts as a broker, these new legal hurdles would still burden a small a portion of the crypto world.
What Can I Do?
The first thing that you can do is call or email your state’s Senators and respectfully tell them that this is not what you want, as their constituent. You can click HERE to be linked directly to the fightforthefuture.org site for this issue! You can also make your voice heard and create awareness on social media platforms.
Lastly, we can work together to push for funding other politicians who will not try to make a cash-grab towards the cryptocurrency sector. Regardless of political views, we can push for candidates who will not try to add additional burdens and taxes on those within the crypto space.
The Cardano Convo Podcast
Listen Notes: https://www.listennotes.com/podcasts/the-cardano-convo-crypto-loops-If9A2-EHaKb/