Last week, the US Senate introduced a trillion-dollar plus Infrastructure bill to upgrade the country’s infrastructure. Unexpectedly, the 2,700 pages long bill contained provisions relating to the crypto industry.
The bipartisan bill, known as HR 3684, is at the heart of the Biden administration’s big push towards reviving the American economy. The bill allocates funds for roads, bridges, transportation systems, and other developmental projects.
However, a surprise tax provision on crypto transactions became the bone of contention stalling the Senate deliberations. The bill intends to raise $28 billion of its planned infrastructure spending by tightening tax compliance within the crypto industry.
The Core Crypto Issues Within The Bill
Several crypto experts and prominent individuals have come out strongly against the crypto provisions. Senator Cynthia Lummis observed that the bill would have a chilling effect on fin-tech innovations within the US.
Among other things, the crypto community is particularly unhappy with the keyword “broker” being tucked into the bill. A broker is defined as anyone “responsible for and regularly providing any service effectuating transfers of digital assets”.
All such entities/individuals handling digital assets will be subject to stringent tax reporting requirements under the Internal Revenue System (IRS). This would mean that even miners should collect and report information on users. Something that is by design impossible in a decentralized financial system which could eventually force innovators to move out of the US.
Besides, Digital Rights organizations like Electronic Frontier Foundation believe that the expansion of financial surveillance amounts to invasion of privacy.
Formidable Push Back
Twitter CEO Jack Dorsey was quick to weigh in on the current crypto situation. Meanwhile, Senator Mark Warner’s proposed amendment, aimed at excluding Bitcoin miners from being considered ‘Brokers’ didn’t sit well with the crypto enthusiasts either. This meant Ethereum miners and developers relying on Proof of Stake Validations would alone bear the brunt of US tax laws.
Coinbase CEO Brian Armstrong, Elon Musk, and politicians like Ted Cruz strongly criticized the move on Twitter.
India’s Opportunity to Shine
India’s fin-tech industry is one of the world’s fastest-growing markets. Innovations in the fin-tech space based on blockchain technology are inevitable.
Realizing India’s potential, Finance Minister Nirmala Sitharaman, expressed the government’s willingness to provide a ‘window’ for fin-tech startups in the proposed crypto regulations to experiment with blockchain technology.
China’s clampdown on cryptocurrency had forced out the billion dollar bitcoin mining industry. Now, the US’s confusing crypto provisions could potentially drive out innovators from North America.
Perhaps, it is time for India to seize this $2 trillion opportunity.
P.S: KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing.
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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