- An 8-word amendment to the Infrastructure Bill has been labelled “unconstitutional” and “inherently anti-American”
- The amendment would require anyone receiving more than $10,000 worth of crypto to file a Form 8300 with the IRS
- The form calls for personal details of the sender to be sent to the agency, which would be impossible for the DeFi sector
An 8-word amendment to the Infrastructure Bill has been labelled “unconstitutional” and “inherently anti-American”. The rule change, which would require all digital asset transactions over the value of $10,000 to be reported to the IRS alongside personal information on the sender, was brought in in the 1980s to combat crime, but lawmakers want to extend the practice to cryptocurrencies. However, given that cryptocurrency transactions by their very nature don’t include any information more than a wallet address, it would be impossible for individuals and companies to comply. The Infrastructure Bill is due to be voted on today, and in its current guise could be disastrous for the crypto community in the U.S.
Infrastructure Bill Raises Its Head
The Infrastructure Bill, and in particular the crypto element, was the only subject in the crypto space back in August. The bill, which was labelled a “de facto mining ban”, would class all cryptocurrency miners and crypto processing entities as brokers, requiring them to acquire a license and report on all their activities in the same way as regular brokers. Given the impossibility of those entities to comply with these measures it didn’t long for critics to say that it would lead to an exodus of crypto innovation from the U.S.
Section 6050I of the tax code was introduced in 1984 and requires businesses and individuals who received cash or a bank transfer of over $10,000 to file Form 8300, which necessitates the reporting of the sender’s personal information such as name, address, and Social Security number to the IRS. The amendment lumps “any digital asset” into the same category as cash, meaning the same reporting would be required. This is similar to the FATF recommendations that were proposed back in 2019.
New Ruling Proposal Chastised
The new ruling proposal was savaged by Meltem Demirors, CSO of CoinShares, who said it was “shameful” that politicians would seek to erode citizens’ financial privacy:
this bill is unconstitutional and inherently anti-American
private citizens have the right to financial privacy and financial freedom
absolutely shameful to see this https://t.co/O9FkVC2CF4
— Meltem Demir◎rs (@Melt_Dem) November 4, 2021
The rule change is a separate provision to the controversial broker issue, with University of Virginia School of Law lecturer Abraham Sutherland telling Cointelegraph that the rule would not “ban DeFi outright” it “imposes reporting requirements that, given the way DeFi works, would make it impossible to comply.”
Where this would leave the DeFi sector, only the future will tell.
