The digital currency industry experienced somewhat of a meltdown over the course of the last few days due to a clause in the Biden administration\u2019s Infrastructure Bill. Some of the loudest voices in the space claim the proposed requirements place impossible demands on various elements within the industry to collect information on and report customers\u2019 tax obligations.<\/p>\n
After lots of jousting and negotiation, which saw panic-stricken speculators mobilize like never before, two amendments were put on the table, with the Biden government backing the one most of the industry is dead against.<\/p>\n
The final vote to decide which amendment will pass has not yet taken place, but it\u2019s going to happen soon, and the vote will determine the legal fate of many projects in the United States for a long time to come.<\/p>\n
What is being proposed? What are the suggested amendments?<\/strong><\/p>\n The proposal in the Infrastructure Bill requires \u2018brokers\u2019 in the digital currency industry to collect information on and report customers\u2019 tax obligations to the government. The definition of brokers as written would include everything from validators to developers to DeFi lending platforms and more.<\/p>\n Realizing the weight of the proposed obligations, the industry quickly responded with a lobbying campaign that saw two proposed amendments tabled.<\/p>\n Digital currency industry big-wigs, from Coinbase CEO Brian Armstrong to Square CEO Jack Dorsey, took to social media to warn followers of the consequences of the new proposals and mobilize them to ask their Senators to back the Wyden- Lummis-Toomey amendment. They claimed that the alternative would effectively kill much of the industry in the United States and force innovative companies offshore.<\/p>\n Which amendment will pass remains to be seen, but the White House threw its weight behind the Portman-Warner amendment. Critics claim Biden is picking winners and giving proof-of-work protocols an unfair advantage.<\/p>\n Panic as the law comes knocking<\/strong><\/p>\n The initial inclusion of digital currencies in the infrastructure bill caused widespread panic, outrage, and claims of unfairness on social media and in the press. As these things tend to do, they rapidly devolved into conjecture and conspiracy theories on social media.<\/p>\n For example, Ryan Selkis, who founded the research firm Messari, claimed that this was part of a two-pronged strategy to ban digital currencies. He claimed that first, the government would favor proof-of-work and make life impossible for proof-of-stake projects, and then it would ban Bitcoin and other proof-of-work protocols based on environmental concerns.<\/p>\n If only Mr. Selkis understood that Bitcoin is green technology, and if small-blockers had gone with maximizing transactions, therefore making Bitcoin less energy-intensive per transaction, this fear could have been avoided altogether.<\/p>\n Others made various unfounded claims ranging from Treasury Secretary Janet Yellen being a white-collar criminal to the United States losing its place as the world\u2019s financial epicenter. Of course, few mentioned how the various amendments would impact their own \u2018investments\u2019 in various digital assets.<\/p>\n Contradictions in the narrative begin to show<\/strong><\/p>\n What\u2019s most confusing about all of this is that most of the loudest advocates of BTC, Ethereum, and other high-profile digital currencies claim that \u2018crypto\u2019 is decentralized, anonymous, and therefore beyond the reach of government and the law. Some have even claimed that the government would have to \u201cban math\u201d to enforce law on the industry, so why the sudden panic?<\/p>\n A similar outburst happened recently when the European Union proposed new rules to make everyone from digital wallets to exchanges comply with AML\/KYC laws.<\/p>\n The reaction to both raises two questions:<\/p>\n Have the people who claim that the law has no bearing on this industry been lying, or do they just not understand what they\u2019re talking about? Either way, it appears they\u2019ve had a much-needed reality check in the United States, and it will be difficult to return to the \u201ccode is law\u201d narrative whatever happens.<\/p>\n\n