‘Criminal felony statute’ in U.S. infrastructure bill could ‘freeze healthy crypto behavior’

Please fol­low and like us:
Pin Share

The U.S. House of Rep­re­sen­ta­tives has passed the $1 tril­lion infra­struc­ture bill, which has divid­ed pol­i­cy­mak­ers and indus­try stake­hold­ers across the coun­try. What’s left now is for Pres­i­dent Biden to sign it into law.

How­ev­er, the real­i­ty of the sit­u­a­tion is hit­ting cryp­to investors and entre­pre­neurs, who are rush­ing to fig­ure out what a par­tic­u­lar pro­vi­sion in the bill means for them.

A bill of questions

Coin­base CEO Bri­an Arm­strong was one of the first to express his con­cern and tweet­ed,

“This 6050I pro­vi­sion in the infra­struc­ture bill seems like a dis­as­ter if I under­stand it. Crim­i­nal felony statute that could freeze a lot of healthy cryp­to behav­ior (like Defi).”

He added,

“Our team is look­ing into this fur­ther to try and fig­ure out what exact­ly the impli­ca­tions are[.]”

Mean­while, the Cryp­to Coun­cil for Inno­va­tion pub­lished a let­ter to voice its dis­plea­sure. In fact, the CCI first point­ed out that oth­er par­ties – such as min­ers and devel­op­ers – could be sub­ject to reg­u­la­tions even if they were not strict­ly “bro­kers.”

Next, it slammed the “undue finan­cial sur­veil­lance” that could come about due to the require­ments. Final­ly, the CCI called for more clar­i­ty from Congress.

Is there a need to panic?

The main source of FUD in the bill is 6050I, which is part of the U.S. Tax Code. A pos­si­ble amend­ment to this sec­tion could put those receiv­ing “dig­i­tal assets,” in charge of col­lect­ing the sender’s per­son­al infor­ma­tion, stor­ing the same, and report­ing it to the gov­ern­ment with­in a cer­tain time frame.

If the bill becomes law, the rules could come into force from 2023. Inde­pen­dent lawyer Abra­ham Sutherland’s report on 6050I explained,

“The pro­posed amend­ment to Sec­tion 6050I states that, in a broad range of sce­nar­ios, “any per­son” who receives over $10,000 in dig­i­tal assets must ver­i­fy the sender’s per­son­al infor­ma­tion, includ­ing Social Secu­ri­ty num­ber, and sign and sub­mit a report to the gov­ern­ment with­in 15 days. Fail­ure to com­ply results in manda­to­ry fines and can be a felony (up to five years in prison).”

Need­less to say, the KYC require­ments vio­late the stan­dard prin­ci­ples of DeFi. Even if cryp­to recip­i­ents want­ed to com­ply, there might be no fea­si­ble way to ver­i­fy or even gath­er the required information.

This means that peo­ple across the cryp­to indus­try – lenders, stak­ers, mar­ket­place clients, com­pa­nies, traders, investors, and more – could pos­si­bly face jail time for fail­ing to comply.

What about high­ly volatile assets that can eas­i­ly move above and below the $10,000 thresh­old? As we saw, even Coin­base need­ed to do some more research.

Privacy vs quietness

Dur­ing an episode of the What Bit­coin Did pod­cast, host Peter McCor­ma­ck called the require­ments an “inva­sion of pri­va­cy.” The CCI’s let­ter also seemed to echo this sentiment.

So, what can be done? To be suc­cinct, Sutherland’s report said,

“A statute cre­at­ing felony crimes for users of dig­i­tal assets should be debat­ed open­ly, not qui­et­ly insert­ed into a spend­ing bill.”



Source link

Please fol­low and like us:
Pin Share

Leave a Reply

Your email address will not be published. Required fields are marked *