A new amendment to the infrastructure bill aimed at taxing the decentralized cryptocurrencies could kill the industry or cause the value of the digital coins to drop severely, argue some senators and entrepreneurs.
The provision, agreed to by Republican Ohio Sen. Rob Portman and the White House last month, would name crypto miners as “brokers,” meaning they would be required to provide tax information, essentially eliminating two critical features of cryptocurrencies: anonymity and the centralizing of an otherwise decentralized currency.
According to The Washington Post, Portman’s amendment insisted the provision would provide $28 billion in tax revenue to the current $1.2 trillion infrastructure plan over the course of ten years.
News of the provision, however, quickly drew the ire of Tesla CEO Elon Musk, Twitter CEO Jack Dorsey, and Republican Sen. Ted Cruz.
“The Senate is on the verge of passing legislation that would be TERRIBLE for cryptocurrency,” Cruz tweeted in light of a #DontKillCrypto campaign that has gone viral on social media.
“The infrastructure deal contains DANGEROUS provisions that would devastate crypto and blockchain innovation,” he added.
Democrat Senate Finance Committee Chairman Ron Wyden and Republican Sens. Patrick J. Toomey and Cynthia M. Lummis last week announced their disapproval of the current provision and co-sponsored an amendment detailing limits to Portman’s provision by changing what it means to be a broker.
According to Crowdfund Insider, the changing of the language would mean, a broker “as defined in the amendment means only those persons who conduct transactions on exchanges where consumers buy, sell and trade digital assets, and does not require information reporting from persons who engage in mining or staking, selling hardware, or software that an individual may use to control a private key, or developing digital assets or their corresponding protocols for use by other persons if such other persons are not customers.”
Sen. Wyden said “investors failing to pay tax they owe through cryptocurrency is a real problem, and I strongly support third-party reporting by exchanges where cryptocurrency is bought, sold and traded.
“Our amendment makes clear that reporting does not apply to individuals developing blockchain technology and wallets,” he added. “This will protect American innovation while at the same time ensuring those who buy and sell cryptocurrency pay the taxes they already owe.”
Still, if either provisions passes, it could mean that those responsible for maintaining or developing crypto would be required to learn who their users are.
“The mandate to collect names, addresses, and transactions of customers means almost every company even tangentially related to cryptocurrency may suddenly be forced to surveil their users,” Rainey Reitman of the Electronic Frontier Foundation warned, according to the L.A. Times.