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Back in August, there were some dire warnings about what the Biden Administration\u2019s proposed infrastructure bill might do to the cryptocurrency and blockchain sector by driving crypto miners out of the United States, crippling America’s leadership role, etc. In response, the crypto industry mobilized a full-court-lobbying press on lawmakers<\/a>. However, it was too late to excise the troubling digital-asset language, and, in November, the infrastructure bill was signed into law.\u00a0<\/p>\n The good news is that the infrastructure law won\u2019t take effect until January 2024, which allows lots of time to patch up its shortcomings. The downside is that its worrisome aspects \u2014 particularly an expanded definition of who or what is a \u201cbroker\u201d and some new digital-asset reporting requirements \u2014 haven\u2019t gone away. As Charles Hoskinson, founder of Cardano, noted<\/a> in mid November shortly after the bill\u2019s signing, the \u201cbad [crypto] language\u201d is now enshrined in law. <\/p>\n More recently, Kristin Smith, executive director of the Washington-based Blockchain Association, told Cointelegraph: \u201cWe remain concerned with the lack of clarity of the broker provision in the now-signed infrastructure bill. […] If the provision remains unchanged, it could have a detrimental impact on the growth of the U.S.-based mining sector.\u201d<\/p>\n There were moments in the past three months when it sounded like the sky might be falling because of the pending U.S. legislation. \u201cIt will be a stunning loss for America and our ability to remain the innovation epicenter of the world,\u201d forewarned<\/a> venture capital firm Andreessen Horowitz. But, things don\u2019t seem so agitated now. <\/p>\n There are indications on both the regulatory and legislative fronts that the bill\u2019s potentially negative effects might soon be mitigated. Several amendments have been introduced in Congress, and the U.S. Treasury Department appears to be listening seriously to the industry\u2019s objections. In retrospect, were some of those ominous warnings overdone?<\/p>\n \u201cThere was a lot of initial concern over which crypto-related entities \u2014 miners, exchanges, open source software devs, self-custody wallet developers, etc. \u2014 would be included in the \u2018broker\u2019 language,\u201d Will Evans, managing director in the U.S. for CEX.IO cryptocurrency exchange, told Cointelegraph. \u201cHowever, the [U.S.] Treasury [Department] followed up by saying the language only applies to those \u2018who can comply,\u2019 which excludes miners, hardware devs, and the like\u201d \u2014 though it still includes crypto exchanges and some investors. Evans added:<\/p>\n \u201cWhile all entities in the cryptosphere aren\u2019t out of the woods, the number originally thought to be impacted is seemingly mitigated.\u201d<\/p><\/blockquote>\n Chris DePow, senior adviser for financial institution regulation and compliance at Elliptic, told Cointelegraph that\u2019s \u201cit’s still too early to tell what the big-picture knock-on effects might be,\u201d though as with any new regulatory initiatives, one has to consider its impact on continued technological innovation. \u201cWe remain cautiously optimistic that some of the more challenging parts of the infrastructure bill related to crypto will be ironed out over time through guidance letters and regulatory commentary.\u201d<\/p>\n \u201cConcerns about the workability of the proposed reporting rules are absolutely valid,\u201d Olya Veramchuk, director of Tax Solutions at Lukka, a crypto data and software provider, told Cointelegraph, adding that even though the law\u2019s provisions don\u2019t go into effect until 2024. \u201cThe crypto community has limited time to continue the dialogue with the regulators at the Treasury Department to create workable, practical rules and guidance.\u201d<\/p>\n Veramchuk was asked about the most disturbing aspect of the law, its overly broad definition of a \u201cbroker?\u201d The $10,000 crypto transaction reporting requirement for businesses? For her: \u201cWithout the appropriate guidance from the Treasury, both reporting provisions could extend past the intended use case.\u201d She added further that, \u201cthis broad definition could mean that individuals have to meet reporting requirements intended for brokers, which is not a productive solution to address reporting.\u201d<\/p>\n Abraham Sutherland, adjunct professor at the University of Virginia School of Law, told Cointelegraph that the law\u2019s amendment to tax code section 60501 is \u201ca major threat to digital assets.\u201d The law would require \u201cany person\u201d who receives more than $10,000 in digital assets to verify the sender\u2019s personal information, including Social Security number, and sign and submit a report to the government within 15 days, according to Sutherland. Failure to comply could be a felony.<\/p>\n \u201cMiners, stakers, lenders, decentralized application and marketplace users, traders, businesses and individuals are all at risk of being subject to this reporting requirement, even though in most situations the person or entity in the receipt is not in the position to report the required information,” wrote<\/a> Sutherland in a September report. <\/p>\n Referencing recent legislative efforts in Washington to temper effects of the law \u2014 like Rep. Patrick McHenry\u2019s \u201cKeep Innovation in America Act\u201d<\/a> introduced on Nov. 17 \u2014 Sutherland told Cointelegraph that the bi-partisan effort \u201cshould be something for the industry to rally around because it forces the issue to be debated.\u201d <\/p>\nCautious optimism?<\/h2>\n
A potential felony<\/h2>\n