Biden Signs $1Trillion Bill That Could Hamstring Crypto

President Joe Biden has signed the $1 trillion infrastructure bill into law, bringing with it new reporting requirements for cryptocurrency transactions that many in the industry feel are unworkable and could hamstring everything from mining to decentralized exchanges.
The provision in question expands the definition of brokers who must report any transaction of more than $10,000 to the Internal Revenue Service (IRS). It sought to raise $28 billion to help pay for the bill.

That reporting must include the personal identity information — essentially anti-money laundering and Know Your Customer data — of the person making the transaction.

Unfortunately, the definition was so broad that it captures not only the real brokers and exchanges it targeted, but also cryptocurrency miners and validators, node operators, software developers, and leaderless decentralized exchanges. None of whom are capable of capturing the data required.

Specifically, it defines a broker as “any person who (for consideration) regularly provides any service responsible for effectuating transfers of digital assets, including any decentralized exchange or peer-to-peer marketplace.”

There was widespread acknowledgement in congress that the provision was poorly written — 99 senators voted to amend the language before sending the infrastructure bill to the house, but one, Sen. Richard Shelby objected for unrelated reasons, scuttling it.

Given the intensity of the political fight over the broader bill, there wasn’t enough bandwidth to get the provision changed in the House.

Much Ado about Nothing

That said, the concern over the bill’s language may be overblown, according to Stephen Palley, co-chair of law firm Anderson Kill’s blockchain and virtual currency practice. In August, he told CNBC:

“Even assuming the whole thing gets through the House, which is anyone’s guess, the language is ambiguous and there’s floor testimony that says that the intent is not to impose reporting requirements on infrastructure providers. Who knows what the implementing regulations would look like, and if bad, they seem likely to be challenged in court.”

Noting that the language could even be read to capture Internet and telecom service providers, he added:

“There is no way the language can be fairly construed to mean that.”

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