In Brief
The US House of Representatives enacted a $1.2 trillion bipartisan infrastructure proposal, which will impose new crypto-tax reporting obligations on all citizens if President Joe Biden signs it into law.
The proposed modification to Section 6050I requires "any individual" who receives more than $10,000 in digital assets to verify the sender's personal information, including the sender's Social Security number, sign, and submit a report to the government within 15 days. Failure to comply carries obligatory fines as well as the risk of criminal prosecution, with a maximum sentence of five years in prison. In effect, Section 6050I mandates that all Americans be subjected to surveillance and reporting.
Our take on the US Infrastructure bill
For starters, Section 6045 is unclear about who qualifies as a "broker" in the context of digital assets. Due to the ambiguity of the term, all miners, stakers, lenders, decentralised application and marketplace users, traders, corporations, and individuals may be liable to this reporting obligation.
Second, the bill demands for the impossible, because these newly appointed "brokers" may not have access to the information required by law. Given the way DeFi functions, it imposes reporting duties that would make compliance impossible, because in most cases, the person or organisation in receipt is unable to disclose the relevant information.
Stifling Innovation in US
Businesses and inventors who are targeted by the statute will be forced to leave the country. We must emphasize that the US government will not be able to stop DeFi or cryptocurrency; instead, they will push innovation to other nations. Consider what might have happened if the United States had suppressed internet innovation in the 1990's? These acts will have a detrimental impact on the future state of the economy.
Only the time will tell.
DISCLAIMER: The information contained in this article is for educational purposes only and does not constitute any form of advice or recommendation by Wheatstones, and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.