- Crypto lawyer Jake Chervinsky has warned of the ramifications of the crypto element of the infrastructure bill
- Chervinsky warned that the bill in its current form could decimate mining in the U.S., and the crypto industry as a whole
- The infrastructure bill would place impossible reporting measures on many crypto handling operations
The new U.S. infrastructure bill that threatens to massively disrupt the cryptocurrency industry in the country could be seen as “a de facto ban on mining” according to one prominent cryptocurrency lawyer. In a tweet thread posted Friday, Jake Chervinsky savaged the bill, warning that the hastily constructed cryptocurrency element, which its sponsors say will raise some $30 billion towards the $550 billion target, would cripple the industry and could see miners, wallet and exchange operators, liquidity providers, and more forced to shut down their operations due to a lack of ability to comply with the new orders.
Infrastructure Bill Would Class Miners and More as Brokers
The bi-partisan infrastructure bill, which seeks to raise over half a trillion dollars to help repair America’s crumbling transportation infrastructure, had a cryptocurrency element added to it last week which has caused huge consternation within the industry. According to Chervinsky, the bill “expands the definition of a “broker” to include “any person who (for consideration) is responsible for and regularly provides any service effectuating transfers of digital assets.” Chervinsky outlines why this definition is so problematic for crypto:
7/ As those who understand crypto already know, users are pseudonymous & access is permissionless.
It’s literally impossible for non-custodial actors like miners to get the information they need to do Form 1099s.
In practice, this could mean a de facto ban on mining in the USA.
— Jake Chervinsky (@jchervinsky) July 30, 2021
In a later tweet he adds that “It might include a huge range of DeFi market participants too, like DEX LPs, liquidators, protocol governors, etc.” and that “Earlier drafts said “even if non-custodial” & explicitly included DEX & P2P markets.”
Scope Could Cripple U.S. Crypto Industry
The scope of this definition means that offering a cryptocurrency service, or potentially even handling other people’s cryptocurrency in any way, may have to be licensed as a broker, necessitating a raft of reporting including collecting customer data such as names, addresses, phone numbers, account details, and more.
Of course, many in the cryptocurrency world, especially miners, will find it literally impossible to comply with this, meaning they may be forced to shut down if the bill passes in its current form. The same would go for hardware and software wallet creators, or in fact almost anyone operating a system that doesn’t collect user data up front – which is most of them.
This is of course the worst case scenario, but Chervinsky warns that it is by no means impossible. He does however offer a crumb of comfort:
17/ So, what can we do?
To start, don’t panic. This provision isn’t final yet & still can be changed.
Even if it passes as-is, it shouldn’t take effect until 2023 at earliest, so at least we’ll have time to try to undo it, in Congress or the courts. This may be a long fight.
— Jake Chervinsky (@jchervinsky) July 30, 2021
An update late on Sunday from Chervinsky showed a rewording of the bill had taken place, but that the language was still “unacceptable” as it still did not definitively exclude miners. Hopefully more will be known in the coming days.
