Understanding the Infrastructure Bill
The recent passage of the $1.2 trillion bipartisan infrastructure bill has stirred a pot of discussions, particularly around its implications for cryptocurrency tax reporting. If signed into law by President Biden, this legislation could usher in a new era of IRS scrutiny for digital asset transactions, surprising many in the crypto community.
Key Provisions Affecting Cryptocurrency
The infrastructure bill does more than just modernize America’s roads and internet connections. Tucked within its pages are provisions requiring that any crypto transaction exceeding $10,000 be reported to the IRS. This means that anyone swapping a few coins for a weekend pizza could potentially face tax reporting headaches.
The Senate Vote and Controversy
The Senate approved the bill with a 69–30 vote back in August, but not without a flurry of proposals for amendments. A group led by senators including Pat Toomey and Cynthia Lummis raised flags regarding the implications of labeling software developers and validators as brokers. Toomey argued that this would result in a flawed reporting structure that could stifle innovation.
What’s in a Name: Who is a Broker?
The vagueness surrounding the term “broker” in the bill has left many experts scratching their heads. In a landscape where roles vary widely – from miners to wallet developers – treating all as brokers risks imposing unrealistic tax reporting obligations. This could put a serious strain on sub-communities within the crypto ecosystem.
Concerns from the Crypto Community
Concerns have heightened over potential tax violations resulting from non-disclosure of crypto earnings, which could lead to felony charges. Noteworthy voices, like Meltem Demirors, have labeled the bill as unconstitutional and an infringement on financial privacy and freedom. She didn’t hold back on her social media, calling the situation absolutely shameful.
The Legal Landscape Ahead
With the legal implications of the infrastructure bill looming, experts stress the importance of revising these sweeping mandates. Abraham Sutherland from the University of Virginia highlighted that the reporting requirements could prove impossible for decentralized finance setups to comply with, posing a significant threat to the user base.
Potential Amendments on the Horizon
Legal experts are rallying for amendments that better delineate who qualifies as a broker and clarify reporting duties. Without these changes, the fear of the bill’s consequences hangs heavy in the air – and not just for crypto enthusiasts.
