Devastating "Infrastructure" bill in US - contact your representatives

[BrianH]

The US looks about to pass this infrastructure bill, which will have devastating impacts across all of crypto, if it passes:
https://www.breitbart.com/politics/2021/07/29/cryptocurrency-tax-threatens-to-put-bipartisan-infrastructure-bill-in-upheaval/

The proposal defines a digital asset as any “digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology as specified by the [Treasury] Secretary.’’.

Kristin Smith, the executive director of the Blockchain Association, said that this could significantly ramp up reporting for businesses and Americans.

“We interpret this to mean software wallet developers, hardware wallet manufacturers, multisig service providers, liquidity providers, DAO token holders and potentially even miners,” Smith said.

Contact your representatives!

[franky1]

quoting breitbart.. that links to coindesk.. that says 'we received a draft'.. but doesnt disclose it..

yawn
but from what it does suggest:
is not users making transactions
is not users depositing into services/custodians

its, if people on licenced exchanges trade $10k coin for other currencies whether it be cash or other cryptocurrencies, file a report the same way the exchange files reports of cash over $10k

so calm down they just want to enhance the standard aml rules of exchange/MSB regulations that already exist.

its nothing to do with all businesses, all users
it highlights exchanges and market places as brokers. not users. not retail stores

i think this is less about taxing users. and more about defining exchanges and market places(even decentralised ones) as things that require having a MSB licence and then be required to follow rules, where they can make money on licences and fines for not reporting

[DooMAD]

so calm down they just want to enhance the standard aml rules of exchange/MSB regulations that already exist.

Clearly the people drafting the legislation don't even know for sure what it is or isn't yet.  And governments have a habit of attempting to draft legislation that isn't remotely feasible because they often lack the understanding to see the consequences of their ill-considered plans.  It's right that people are challenging this to make sure it's done correctly. 

It looks as though you've once again treated something as a foregone conclusion just because you've imagined the outcome being a certain way.  You should work on that.  Reality will bite you again if you're not careful.  Then you'll be in denial about yet another thing for the rest of your life. 

[o_e_l_e_o]

There is a great Twitter thread about this here: https://twitter.com/jchervinsky/status/1421150344051048451

Essentially, the definition they are applying is so broad as to encompass pretty much anyone they want it to encompass:

any person who (for consideration) is responsible for and regularly provides any service effectuating transfers of digital assets.

It could be argued that everyone from node operators and miners to software developers are providing a service which effectuates transfers of bitcoin. This bill would require them all to collect KYC from all their users so they could issue them all with a Form 1099. This isn't just a huge threat to your privacy, but to bitcoin itself. If they get what they want, then best case scenario we have nodes KYCing users before accepting their transactions to be relayed and refusing transactions from nodes which don't enforce KYC. Worst case scenario they simply ban bitcoin since it is completely impossible for miners to collect KYC for every transaction they mine or wallet devs to collect KYC for everyone who downloads their wallet.

Call your member of the House and Senate directly. Or use the phone number and advice here: https://actionnetwork.org/petitions/stop-the-senate-from-sneaking-through-total-surveillance-of-the-crypto-economy-call-517-200-9518/

If you don't want to call, then email them. You can also contact senators Kyrsten Sinema and Rob Portman directly at the following links:
https://www.sinema.senate.gov/contact-kyrsten
https://www.portman.senate.gov/meet/contact?office=37

[franky1]

so calm down they just want to enhance the standard aml rules of exchange/MSB regulations that already exist.

Clearly the people drafting the legislation don't even know for sure what it is or isn't yet.  And governments have a habit of attempting to draft legislation that isn't remotely feasible because they often lack the understanding to see the consequences of their ill-considered plans.  It's right that people are challenging this to make sure it's done correctly.  

It looks as though you've once again treated something as a foregone conclusion just because you've imagined the outcome being a certain way.  You should work on that.  Reality will bite you again if you're not careful.  Then you'll be in denial about yet another thing for the rest of your life.  

oh grow up you trolling drama queen
i said DRAFT and SUGGEST

quoting breitbart.. that links to coindesk.. that says 'we received a draft'.. but doesnt disclose it..
yawn
but from what it does suggest:

maybe you just dont understand the subtlety of my yawn. or my calm down hint of nothing important..
maybe you didnt get where i said 'they want' instead of your thinking that i said 'they will'

well yet again you jump to social drama trolling to try to poke the bear.. but you are just making it too easy
to put you back in your toddlers crib.

i know you took one line, out of context that avoided the words DRAFT/ SUGGEST to then go on a social drama ramble about how you think my one line you did quote must be some committed conclusion..

but like always you never understand context or content. you just want to be a drama queen
take your drama else where.

[BrianH]

Essentially, the definition they are applying is so broad as to encompass pretty much anyone they want it to encompass:

Exactly!

Yes, this is draft legislation and it is up to citizens to make sure it does not become final. This is not the time to be resting on people's heels or attacking the source. Multiple crypto news outlets are trying to make people aware of this potentially devastating law. "Any person who ... effectuates digital asset transfers" could refer to anyone sending crypto.

Senators are currently rushing this legislation through and attempting to sneak crypto legislation in and finalize the bill THIS WEEKEND, while many are not paying attention. They will likely vote on it Sunday or Monday.

Senators will be pressured to accept the final version, which very likely will include this amendment, because the bill is "infrastructure." The bill is already likely filibuster proof.

...the cost for those involved in cryptocurrency may be high, with some claiming that it will “kill” the industry as we know it.

The bill includes a provision that broadens the definition of a broker for tax purposes to include “any person who is responsible for and regularly provides and services effectuating digital asset transfers” in the.

Crypto miners, proof-of-stake network validators, and maybe even anyone involved in decentralized finance markets (think liquidators or governance-token holders) will be required to file 1099 forms. The ostensible reason is to ensure people pay taxes on their crypto earnings.

Cryptocurrency wallet regulations would require banks and money service organizations (MSBs) to submit reports, preserve records, and authenticate the identities of consumers. It’s possible that things will deteriorate in the future, according to a new report from the Treasury Department.

General counsel for DeFi lending protocol Compound, Jake Chervinsky, tweeted, “Non-custodial actors, such as miners, are unable to obtain the information required to complete Form 1099s. In practice, this might amount to a de facto mining prohibition in the United States."

https://crypto.co/technology/us-senate-550b-infrastructure-bill-will-kill-the-crypto-industry/

Front page on Coindesk:

The creators of software wallets could even be required to track and report user transactions

https://www.coindesk.com/fundamentally-incompatible-how-the-proposed-crypto-tax-rules-miss-the-mark

Another excellent episode on Coindesk on how majorly flawed this legislation is.

Speak up! Contact your representatives.

[o_e_l_e_o]

From the article you linked to:

This potential law, much like the new European money laundering rules introduced this month, would likely create huge honeypots of personal and financial data to be targeted by hackers – including your data, whether you sought to evade taxes or not.

This is another very good point. If you want to use bitcoin, then everyone you interact with, from wallet developers to nodes to miners to exchanges could be required to collect your KYC. How long do you think it will be before a massive hack or leak of this information? The Ledger database hack, for example, has led to large number of successful scams and an absolutely massive number of attempted scams, including some fairly sophisticated attacks and threats of physical violence. And that's just based on the knowledge that people own a hardware wallet, with no knowledge about how much bitcoin they own. Do you really want your KYC details attached to the fact that you just moved a significant amount of bitcoin, or attached to your cold storage wallet addresses? Say goodbye to plausible deniability or any sort of privacy.

Thing is, this doesn't just affect US citizens, but will affect everyone who interacts with any US based service, company, entity, or individual. I can't verify that you are not a US citizen and don't require me to send you a 1099 unless you complete KYC to prove it.

I usually don't care about regulations being passed forcing centralized exchanges to do certain things, because if you value your privacy or security at all then you are already steering well clear of centralized exchanges. But this bill is an absolute mess and will affect the entire bitcoin ecosystem. Contact your representatives and tell them to stop this now.

[franky1]

calm down folks

its about MSB that act as brokers.. its not about every average joe.
your not a MSB if you take money out of an ATM or as for a withdrawal from a bank. so relax.

developers are not MSB. even the developers that created the mastercard software/network were not themselves treated as MSB.

but if you are a service(business) doing transfers on behalf of others.
for instance:
escrows
coinjoins/coin swaps
exchanges..

then watch out
if your a customer of those businesses relax you will not be asked to become a MSB. but expect many services you use to change funds into different currencies. to kyc you.

if your a software developer,(blockchain dev) your not a MSB

the most that i can see happening is coinjoin/escrow's that have offices in america, pull out of america and set up in another country and then IP ban US citizens. much like the days of the bitlicence
(by which most MSB's done that already so not much to happen)

[LFC_Bitcoin]

Little update on this guys -

Jake Chervinsky
@jchervinsky
Monday mid-day infra bill update:

We're moving in a good direction. We may reach a point today (or later this week) where our fate rests in the hands of a few Senators, & we need to light up their phones with 1,000s of calls in support.

I'll let you know if & when. Stay frosty.
https://twitter.com/jchervinsky/status/1422255785195749387?s=21





Edit -

May as well add this too -


@jimmysong
There's bipartisan support to change the crypto language in the infrastructure bill. @PatToomey (R-PA) and @RonWyden (D-OR) both think the bill's crypto tax language doesn't make any sense.

Maybe this pleb thing works outside of #Bitcoin  as well.




Edit -

@NeilJacobs

For those who say contacting Congress doesn’t matter:

Senator Pat Toomey: “The bipartisan infrastructure package includes a hastily-designed tax reporting regime for cryptocurrency. Simply put, the text is unworkable. I plan to offer an amendment to fix it.”

#bitcoin

https://twitter.com/neiljacobs/status/1422301936326520834?s=21

[BrianH]

calm down folks

its about MSB that act as brokers.. its not about every average joe.

Are you a lawyer? I am not, but what I have learned is that if legal language can be applied to something, eventually it will be applied to something - especially when it is the government deciding against you. It doesn't matter what the original intent was or what people think it means. The current language can be interpreted to apply to every average joe.

Latest discussion:

According to Axios, figures in the industry remain opposed, because the updated text still doesn’t clearly exempt “parties like miners, node operators, and software developers” working on things like wallets, as well as decentralized exchanges with no one individual or group in charge, and some of these parties might not be able to comply with the reporting mandate. For example, decentralized exchanges don’t have any central administration in place to implement the changes and don’t collect names of users, let alone other data like contact information or Social Security numbers. The result, industry groups have said, would be a de facto ban...

Blockchain Association Executive Director Kristin Smith told Bloomberg that the bill remains “hands-down the single greatest legislative threat that we’ve seen gain momentum.” Shehan Chandrasekera, the head of tax strategy for CoinTracker, told the news agency that while the bill treats cryptocurrency as “covered securities” requiring brokers to report how much any transferred asset was originally purchased for, in order to determine the tax implications of capital gains or losses. Chandrasekera added that when an exchange deals with someone who “transfers crypto from their hard wallet or a decentralized exchange that doesn’t share nor track cost basis information,” it wouldn’t be able to meet the reporting requirements.

Thanks, LFC_Bitcoin. Toomey is proposing an amendment. People's voices are being heard. Keep up the pressure! His full press release:

“Congress should not rush forward with this hastily-designed tax reporting regime for cryptocurrency, especially without a full understanding of the consequences. By including an overly broad definition of broker, the current provision sweeps in non-financial intermediaries like miners, network validators, and other service providers. Moreover, these individuals never take control of a consumer’s assets and don’t even have the personal-identifying information needed to file a 1099 with the IRS. Simply put, the text is unworkable. I plan to offer an amendment to fix it.”

[DooMAD]

calm down folks

its about MSB that act as brokers.. its not about every average joe.

Are you a lawyer? I am not, but what I have learned is that if legal language can be applied to something, eventually it will be applied to something - especially when it is the government deciding against you. It doesn't matter what the original intent was or what people think it means. The current language can be interpreted to apply to every average joe.

That's the healthy approach.  Assume the worst and prepare accordingly.  If I were telling people to remain calm, it's not because I'd be making assumptions that these proposals won't affect people.  It's because legislation changes as the times do.  Take the early automotive industry and Red Flag laws as an example.  If the technology is robust enough, it will outlive any silly and overly encumbering laws. 

However, if people can intervene and stop the lawmakers repeating past mistakes, that's clearly the better way to go.  Even short-term disruption is better to avoid if possible.

[Macadonian]

Nodes would be providing a service to other people which means that they would require KYC from those connecting to it. This is the USA trying to ban Bitcoin without actually banning it instead bringing in legislation that they know would stop most people from using the currency.

[Obito]

Nodes would be providing a service to other people which means that they would require KYC from those connecting to it. This is the USA trying to ban Bitcoin without actually banning it instead bringing in legislation that they know would stop most people from using the currency.

I don't think that it's going to stop people from using bitcoin, unless their die hard fans of privacy that doesn't know that their personal information is already on the records of the government. It's actually a good move for US to do this because I think that even if it looks bad for now, we at the least don't have to worry of a total ban on a federal level.

[o_e_l_e_o]

I don't think that it's going to stop people from using bitcoin, unless their die hard fans of privacy that doesn't know that their personal information is already on the records of the government.

So what, exactly? Since the government have your KYC data, that's justification enough for literally every node operator to collect your KYC data and share it with every other node operator? After all, a node can't accept a transaction from another node unless the KYC data for that transaction is sent alongside it. What about every miner, since again, they cant mine transactions unless they know the accompanying KYC data. You trust the security of every single one of those users? Hell, all I have to do is fire up a node and immediately receive thousands of users' KYC data, complete with passport scans and selfies. A scammer's dream come true! Your identity would be stolen before you could even put a credit freeze on your details.

It's actually a good move for US to do this because I think that even if it looks bad for now, we at the least don't have to worry of a total ban on a federal level.

Nonsense. The US can still ban bitcoin anytime they like. There is nothing good about this legislation.

[franky1]

That's the healthy approach.  Assume the worst and prepare accordingly.

im gonna keep this quote for future reference for other topics. i think doomad can already realise why his words can be used against him. especially when he social dramatises how others that think the worst should just f**k off


in this case, thinking the worse has its limits. because although it does not define what a broker is not. it does define what a broker is. and makes no mention of a broker being a software developer or a customer of a investment company.
leaning on the side of 'if it doesnt mention it assume the worse that its included'. means a banana and a grapefruit can be a broker too.. (famepalm)
its where common sense needs to be added to the context of the document. to then understand it. . and not just pick something thats not mentioned in it and then try to twist it into suggesting that it includes it

in short its about MSB(money service businesses) not the contracted software developer of MSB. not the delivery guy delivering to a MSB, not a customer of a MSB

so again defining what is an MSB would include businesses and associations and organisation that perform transfer, exchange, transact as a service business. not lil old joe paying for a bottle of beer at the local 7-11

its actually about MSB that are brokers.. not grocery stores accepting money for goods.
brokers(companies being custodians and performing trades of investment that require its employees doing the trades to pass the series 7 exam)

now can people stop trying to twist it to make it sound like grocery stores, and grocery store customers are brokers.. because they are not. and the draft bill does not even assume or suggest or hint any such thing that retailers and customers are

so again. dont worry about normal users having to report every time they accept a block(like some are trying to FUD above)

its about services like coinjoin. exchanges, altcoin swaps. (actual businesses offering the service)
so yea try contacting your local reps to get the draft dropped for its real purpose. just dont go running down rabbit holes thinking it actually affects everyone receiving a block of data or buying a coffee

[DooMAD]

That's the healthy approach.  Assume the worst and prepare accordingly.

im gonna keep this quote for future reference for other topics. i think doomad can already realise why his words can be used against him. especially when he social dramatises how others that think the worst should just f**k off

I guess any time you're present in a topic, I have to add the qualifier "within the realms of reality" after "assume the worst".  Most people would take that as a given, though.   

[o_e_l_e_o]

-snip-

Once again, here is the proposed wording:

any person who (for consideration) is responsible for and regularly provides any service effectuating transfers of digital assets.

So no, neither a banana nor a grapefruit would qualify as being a broker, but any person who provides a service which helps you make a transaction, any transaction, could be. Does a wallet help you make a transaction? Undoubtedly. Does a node help you make a transaction? Unless you mine your own transactions, absolutely. Does a miner help you make a transaction? Well, good luck making a transaction without a miner.

Looks like Toomey has seen some sense, as per LFC above. Here's another quote from him:

By including an overly broad definition of broker, the current provision sweeps in non-financial intermediaries like miners, network validators, and other service providers. Moreover, these individuals never take control of a consumer’s assets and don’t even have the personal-identifying information needed to file a 1099 with the IRS.

[franky1]

Once again, here is the proposed wording:

any person who (for consideration) is responsible for and regularly provides any service effectuating transfers of digital assets for another person.

FTFY

that does not mean bitcoin nodes.. because nodes dont get any 'consideration' (fee) nodes are not even custodians of other peoples assets.

also the "regularly provides any service effectuating transfers"
this does not mean just handling money(retail).. nor does it mean handling data records of transfers(accountants)(databackup)
nor software developers making software for brokers/MSB

and no.. mining pools are not custodians on behalf to 2 parties. they dont take responsibility of peoples funds.
so dont fall down that rabbit hole


it actually then comes back to the common sense of what a broker is. and what a MSB is

it means actually operating a service for the purpose of transfering assets for another person
average joe with a node is not offering a service
a grocery store accepting payment is not offering a money transfer service

businesses classed as MSB are affected
this again is the realm of the big exchanges and coinjoin, escrow services. not a thing to scare bitcoin node users over.


if people poke their senator about irrational 'worse case' stuff. the senator will just think the person poking is irrational and ignore their plea
however if you act rational and poke your senator about rational pleas regarding over reach of laws on MSB's. then you will have a point worth listening to.

in short
if you phone a senator and say 'im just a node user i dont want to report anyone' they will say fine bye.
because thats not what the proposed law is about,

if your an MSB and phone a senator. then yea the conversation will be a bit longer and more worthy

[o_e_l_e_o]

-snip-

Right, well perhaps you would like to phone Senator Toomey and explain to him how your interpretation of the bill is the correct one and so he doesn't need to propose any amendments.

The very fact we are having this discussion is proof enough the bill needs amended. The wording shouldn't be open to this much interpretation, as there is absolutely no guarantee that this Senate nor every single successive Senate will interpret the bill in the way you think they should. All it needs is a couple of anti-bitcoin Seantors to be elected, and they can and would use the wording here for their own purposes.

Keep phoning your representatives. Let's get this fixed.

[Poker Player]

I am with o_e_l_e_o and the others on this matter. This is too important to think that nothing is happening and play it down.

If the bill were to be approved as it is, it would lead to an exodus of miners again. But I am confident that good sense will prevail and it will be modified.

Another thing is that I think, over time, there is going to be less and less anonymity in Bitcoin. The powers that be are going to try to identify as many people as they can, how much they own, what transactions they do, etc. The EU is also taking steps in this direction: EU wants to ban crypto anonymous transactions and wallets. And I think they will succeed to a large extent, but hopefully there will always be a space for privacy.

By the way, there seems to be some steps in the right direction:

https://twitter.com/BlockchainAssn/status/1422661028815441925