This week, the crypto industry is vigorously opposing the wording in the Senate’s bipartisan infrastructure bill, which could kill most of the crypto ecosystem.
The language in the bill will require crypto brokers to report customer information to the IRS. More importantly, during the weekend, it expanded the definition of “broker” to anyone “responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person”, which does not exclude miners, software developers, stakeholders, and Other individuals who have no customers in the crypto economy.
According to Christine Smith, CEO of the Blockchain Association of the Cryptocurrency Exchange Association, which is committed to change, the language has not yet been finalized as of Monday, and there is still time to fix it even though a follow-up bill before then. Public policy at the federal level.
According to data from Coin Metrics, Bitcoin fell more than 5% on Monday and Ethereum fell 1.8%. The uncertainty surrounding the bill weighed on market sentiment.
Jake Chervinsky is an attorney experienced in cryptocurrency-related securities litigation and government application defense matters. He is now the general counsel of DeFi Compound Labs. He said that if the existing company fails to comply with the regulations, This will also be detrimental to existing companies.
Because infrastructure bills are so expensive, you must include a large number of “pay-fors” or clauses in your invoices that generate revenue for the government to offset new costs in the rest of the invoice to keep them neutral. And eventually won the support of the Republican Party in the Senate, Chervinsky explained.
The language will not affect centralized exchanges like Coinbase or other listed companies, where consumers can buy cryptocurrencies such as Robinhood, Square, and PayPal. As a public company, they clearly identify customers and work with them to meet IRS reporting requirements.
Still, “they’re strongly opposed to the crypto pay-for provision because they know it could wreak havoc on the broader crypto markets, which would damage their business as well,” Chervinsky said.
For example, Coinbase bought Bison Trails for $80 million earlier this year to support its shared services. Most of the company’s revenue is based on transaction fees, but CEO Brian Armstrong said he wants to diversify these sources of revenue, including strengthening his equity offering.
Smith said that the goal of providing reports for centralized exchanges is a valuable goal supported by the Blockchain Association, as long as it is limited to suitable companies.
Bitcoin miners also have no clients who can report their information, and if the bill is passed in the current language and they are treated as brokers, they may also be harmed. This will be a blow to the industry, which has been eager to gain more market share because China has cracked down on the Bitcoin mining business and moved more than half of the Bitcoin mining business out of China, most of which moved to the United States.