The new trillion-dollar, bipartisan US Infrastructure Bill passed into law on August 11, 2021 set a key benchmark for crypto in terms of its part in the US economy.
While the bill primarily deals with infrastructure investments across the nation, one item in the bill plans to pay for that infrastructure by raising $28 billion over 10 years from the crypto industry, primarily by extending financial reporting requirements for digital assets to brokers and trades of more than $10,000.
The core contention during the debate, however, was the wording of that segment of the bill, which seemed to apply too wide a definition of “brokers”. Blockchain miners, validators, wallet developers, platform developers and other parties not typically considered “brokers” by mainstream finance would technically fall under the new reporting requirements and therefore also be subject to tax liabilities.
What does the bill and the lead-up to its passage mean for crypto in the US and across the world?
1. Crypto as a major economic force
The fact that crypto taxation was part of the bill is already a sign that crypto is now regarded as a small but growing part of the US balance sheet. Other nations are likely to follow suit and include crypto incomes as part of their national budgets. Senators spoke out to say that the crypto industry was part of a productive and technologically innovative new era that forces government to rethink their old systems. This brings mainstream clout to the industry but also pulls it further away from its libertarian roots.
2. Crypto’s voice in politics
While the issue was primarily one of American politics, we saw many prominent voices speaking out in favor of normalization of crypto and also for representation of the crypto community’s voice in policymaking. Former Presidential Candidates Ted Cruz, Andrew Yang, and Marco Rubio joined in with several prominent senators to push, albeit unsuccessfully, for clearer wording in the bill when it came to who would be considered a crypto “broker”.
3. Unity in the industry
While disagreements within the industry are common, during the bill’s hearing many prominent names in the industry stood shoulder to shoulder to resist the vague language that could hamper the industry’s growth. This unity is a positive signal for the future development of blockchain technology and the digital asset market.
4. Crypto is important enough to significantly hold up a bipartisan bill
The lengthy delay in the debate and passage of the Infrastructure Bill was dominated by crypto-related discussions and horse trading. This signifies that there are enough lawmakers and lobbyists to put pressure on the government to get things right with crypto as they attempt to regulate and normalize the nascent industry.
5. Visibility is not enough
Although the proceedings could be counted as a win for crypto in terms of visibility and influence, the bill passed without any concessions to the crypto bloc. If the community cannot make effective use of their rise to prominence, then there will be very few tangible benefits at the end.
6. Regulation will slow down crypto but normalize it
With the rushed, poorly-worded bill now passed, the global industry must be prepared for its actual impact. This new law will of course do nothing to dissuade bad actors, who will find ways to bypass declaration and taxation. Other participants in the industry, particularly miners, validators, and developers, will find themselves held back, if only slightly, by the new legislation and may consider moving abroad.
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