USA Bitcoin mining, development, running nodes, transfer >$10K now felonies

[BrianH]

Mods, I urge you to add this to important announcements. This is a PSA for the USA.

The US "infrastructure" bill passed the Senate and House. It will be signed by the President in the next few days.

When this is done, all US citizens engaging in mining, development, running a node (i.e. running Bitcoin core) will be legally "brokers". These activities will now be felonies, by federal law, since reporting is impossible.

Additionally, transferring >$10k without recipient's SS#, etc. will be a felony.

Staking for proof-of-stake (PoS) cryptos, NFTs and sending money via DeFi are also now felonies. DeFi is dead.

Privacy is also effectively banned.

If you live in the US, please make considerations for all your crypto activities, before this bill becomes law.

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[Lucius]

It is really a real pity that reason did not prevail and that some amendments were not accepted, which in my opinion is very strange considering that the crypto community in the US is very strong and active. It seems that large crypto companies were not very interested in trying to prevent or at least to some extent change this law, and in that case, it does not seem to be a problem for them.

It remains to be seen how this law will be implemented in practice and how much impact it will have on Bitcoin globally.

[franky1]

NO THEY WONT

the myth started from some idiot on twitter that has no clue what bitcoin is to realise the difference between a node and a broker

he has no fiat understanding of the term broker either
the idiot started a FUD and many people fell for it and became fearful.

exchanges are brokers.. not developers
mixers are brokers not miners
remitters are brokers not node users

so calm yourself down. and realise the actually terminology is about persons offering a service for payment, where the service is the custodialship of coin for and on behalf of others payments

so calm down developers, node users and miners are not affected.

[DaveF]

But that does not make for good scare headlines.
What is also interesting is that cash and similar instruments have had reporting requirements for a very long time.
Someone hands your business $10000 for something you do have reporting obligations. This is just putting BTC / crypto in the same pile as cash.

-Dave

[o_e_l_e_o]

The text of the bill can be viewed here: https://www.congress.gov/bill/117th-congress/house-bill/3684/text

The first point to note is this one. A broker shall include:

any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.

It is trivial to argue that a miner is responsible for providing a service which effectuates transfers on behalf of someone else, given that without miners there would be no transactions at all. I know franky1 likes to endlessly repeat his opinion with no evidence to suggest that anyone in the US Congress thinks the same way he does, but the fact of the matter is that there have been multiple attempts in both the House and the Senate at redefining this language and there are already some members of Congress promising to bring forth new legislation to redefine this language. If this language was as clear and unambiguous as franky1 thinks it is, then there would not have been several previous and several ongoing attempts to fix it. It doesn't matter at all at how any single one of us interprets this language; it can be interpreted in a way which suggests that miners are brokers, and this interpretation has been reached by multiple members of both chambers. If you think for a second that the US government will not interpret it in the way that suits them best and lets them tax as many people as much as possible, then you are incredibly naive.

The second point to note is this one.

Treatment as cash for purposes of section 6050i.

Section 6050i (https://www.law.cornell.edu/uscode/text/26/6050I) says this:

(a) Cash receipts of more than $10,000
Any person—
   (1) who is engaged in a trade or business, and
   (2) who, in the course of such trade or business, receives more than $10,000 in cash in 1 transaction (or 2 or more related transactions),
   shall make the return described in subsection (b) with respect to such transaction (or related transactions) at such time as the Secretary may by regulations prescribe.

(b) Form and manner of returns
A return is described in this subsection if such return—
   (1) is in such form as the Secretary may prescribe,
   (2) contains—
      (A) the name, address, and TIN of the person from whom the cash was received,
      (B) the amount of cash received,
      (C) the date and nature of the transaction, and
      (D) such other information as the Secretary may prescribe.

Anyone who makes a trade (or a series of related trades) worth more than $10,000, must file a return containing the name, address, and TIN (Taxpayer Identification Number) of the person they are trading with. The TIN is most commonly the other party's SSN. At current prices, this means you can trade a total of 0.16 BTC with someone before you have to ask for their KYC information and SSN.

[DaveF]

Anyone who makes a trade (or a series of related trades) worth more than $10,000, must file a return containing the name, address, and TIN (Taxpayer Identification Number) of the person they are trading with. The TIN is most commonly the other party's SSN. At current prices, this means you can trade a total of 0.16 BTC with someone before you have to ask for their KYC information and SSN.

But the point is that if I were selling you unregistered real goods for cash. Say, gold coins. That same law applies.'

If I sell you a car, there is a record of sale, transfer of the VIN and some other stuff in which you could not really have to do it.

If I sell you a bag of diamonds there is not. If I sell you a few of top of the line gaming video cards at the moment there is not. If either one of these things happen, you are responsible for the same thing.

Just because nobody does it, does not mean that it should not be done by law.

I used to see this all the time when a sort of co-workers family had side business dealing in wholesale used pinball / video games. People would try to hand them cash, and they would ask for check / CC instead just to avoid dealing with the reporting. They finally put up a sign in the office that said. "The games take cash, we only take credit cards" And that was 20+ years ago. It's not even that people were avoiding taxes, it's just that arcades had a lot of cash and it's was easier for them to let someone else deal with the paperwork.

-Dave

[o_e_l_e_o]

But the point is that if I were selling you unregistered real goods for cash. Say, gold coins. That same law applies.

Oh sure. I was just pointing out that this was the relevant piece of the law as applies to what OP was talking about.

What annoys me about this is not that they are bringing bitcoin in to line with cash trades, it is that they continue to treat bitcoin as whatever suits them best at the time. By all means treat bitcoin as the same as cash - I think that is an entire reasonable stance to take - but then you need to acknowledge that it is indeed a currency and stop charging people capital gains on it when they buy a cup of coffee. At the moment it is treated as cash for the situations where it means the government can tax you more, and it is treated as property for situations where it means the government can tax you more.

[dkbit98]

Anyone who makes a trade (or a series of related trades) worth more than $10,000, must file a return containing the name, address, and TIN (Taxpayer Identification Number) of the person they are trading with. The TIN is most commonly the other party's SSN. At current prices, this means you can trade a total of 0.16 BTC with someone before you have to ask for their KYC information and SSN.

Looks like United States are slowly turning into tax hell not only related with Bitcoin but with everything else, and I think they are planning to increase other taxes soon.
I don't know if they are really thinking they can avoid financial collapse with this mambo jumbo stuff or they just want to milk as much money from people as they can.
I also wonder what would happen if majority of people just stop paying bunch of taxes (call it peoples experiment), at least not pay them like they are paying them now, that is more like an extortion.

[pooya87]

Yet another reason why I argued against the claim that "Chinese miners moved to USA". It is silly on all accounts, this included. It is like falling from the frying pan into the fire, or as we call it "came out of the hole just to fall into the well".

[franky1]

The text of the bill can be viewed here: https://www.congress.gov/bill/117th-congress/house-bill/3684/text

The first point to note is this one. A broker shall include:

any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.

It is trivial to argue that a miner is responsible for providing a service which effectuates transfers on behalf of someone else, given that without miners there would be no transactions at all. I know franky1 likes to endlessly repeat his opinion with no evidence to suggest that anyone in the US Congress thinks the same way he does, but the fact of the matter is that there have been multiple attempts in both the House and the Senate at redefining this language .

1.
a miner does not take responsibility of assets on behalf of another person
as thats called custodianship

please actually get a screw driver open up an asic and please try and find the hard drive that stores keys or even blockchain data or even transaction data...

oh look there is no hard drive or memory store for this..
hmm seems i mentioned this before to oeleo and he has simply been ignorant.

a miner does not take responsibility nor does any transfer.
a miner just hashs a block ID

2. there has not been multiple attempts IN THE HOUSE and senate.. because if there were. the wording would have been redefined. because they are the ones to do it.(its either a yay or nay).
what you will find is that alot of the twitterverse of emotional social media people campaigned TO the representatives of the house/senate. because the twitterverse/redditers were kneejerk reacting to a guy that didnt know better ..
its much like how twitter campaigned that the world is flat and that trump won 2020

3. to emphasise again
no miner takes responsibility for other peoples funds nor does a miner process a transaction.
if oeleo can prove otherwise he should provide the chips manufacturing reference number, the firmware and the software that has anything related to transactions, public and private keys of other peoples funds
i shall wait for his "proof"

4. oeleo is(secretly contradictory) not afraid of bitcoin full node/miner/dev users being deemed brokers. his real fear is actually on his favourite altnet LN where routing is involving the hot potato movement of funds on behalf of other people. meaning anyone using LN that is offering a route payment for a non-zero fee is deemed as a broker.
but its very funny how he remains very quiet about his real fear. and instead wants to claim anyone using bitcoin is a broker.. very obvious he wants people to stop using bitcoin and shift to his favourite altnet whilst hiding the truth that using LN in the way its designed is the actual' broker' definition
but oeleo's biggest problem of understand is that he cant tell where bitcoin ends and where LN begins. and still believes LN (a separate network) is bitcoin.

its become comedy gold watching certain social drama queens try to create social chaos

Anyone who makes a trade (or a series of related trades) worth more than $10,000, must file a return containing the name, address, and TIN (Taxpayer Identification Number) of the person they are trading with.

not in all cases.
seriously it is obvious you have never run a business or even done any transaction of any kind above $10k personally yourself.
..
people dont 'file a return' everytime they send or receive $10k
in fiat world.. the BANK does that for you.. because THEY are the MSB (money service business)
AKA broker
remember the reference "for and on behalf of other people" that is where the BANK is the broker. not the buyer/seller

as others have told oeleo. a surgeon doing a heart transplant does not become a broker for charging for his surgery. (something oeleo should know as a doctor)

the wording of this rule is about money service businesses.
i told oeleo before and will tell him repeatedly until he actually goes and does it
RESEARCH MSB

instead of crying about how many times i tell him things and he just replies that i said something multiple times but then pretends i didnt say it.
how about he just researches the subject. instead of relying on twitterverse as is opinion maker

for anyone offering a service that takes responsibility of pother peoples funds on behalf of others for a fee needs to become an MSB
these MSB(brokers) then have to follow policies and guidelines. which include reporting
oh and they get given access to a portal to allow them to report.
yep normal citizens dont report things. because they dont have access to the portal, why? well because normal citizens are not MSB's

[moderator's note: consecutive posts merged]

[Obito]

Wouldn't there a way to prevent reporting your transactions if it's under 10k? I think I've heard it in a video regarding money laundering and that you won't be flagged if you are only transferring that much amount. Plus, would it be that difficult for users in US to navigate when this bill is signed? Privacy was a dead a long time ago, around the time of Cold War and Red Scare, they're already listening to our homes.

[franky1]

Wouldn't there a way to prevent reporting your transactions if it's under 10k? I think I've heard it in a video regarding money laundering and that you won't be flagged if you are only transferring that much amount. Plus, would it be that difficult for users in US to navigate when this bill is signed? Privacy was a dead a long time ago, around the time of Cold War and Red Scare, they're already listening to our homes.

people dont report there transactions. brokers do.
people moving their own money does not make them a broker.
an accountant auditing your account is not a broker. a retailer receiving your money is not a broker

a broker is someone that has custody of your funds on your behalf and then moves funds for you and does it for a fee

banks. escrows, remitters and such

this broker thing is not the same as a income declaration you do to the IRS where you have to report yearly value and report large income streams.

this broker rule is about businesses operating a service to take responsibility of funds for other people and move them on behalf of other people

the broker report is a separate thing to the self assessment irs report(something oeleo is confused with and cant tell the difference of)

citizens do not become brokers simply because they handle more then $10k
bitcoiners do not become brokers simply by writing some code or using an asic or running a node

[davis196]

If the USA treats cryptocurrencies as fiat,gold or any other financial assets,that's a good thing.
Reporting financial transfers bigger than 10K USD isn't such a big deal,unless the sender and the receiver have something to hide.If we want crypto to become fully legal,then we have to sacrifice all privacy and become fully transparent.If you want privacy,then use Monero and stay in the darkweb.
Crypto miners and developers cannot be treated as "brokers",because they don't fall under the legal description of being brokers.If there's such mistake in the "infrastructure bill" then somebody will fix it sooner or later.There are Bitcoin/crypto supporters in the US congress,they will have to step in.
The current Bitcoin price is 65K USD,so nobody is panicking due to this unsuccessful FUD attempt.

[Kakmakr]

I think it does not matter who they are targeting for this law, because it's intent is clear.... strip Bitcoin's anonymity and get as much taxes as possible from it. (It will first target the big players in the industry and then it will be amended to cover everyone, if it was not applicable to them)

You get this type of things, when you have a president that can hardly finish a sentence ....How will he have the attention span to comprehend the full impact of a law like this. (The Puppet masters behind the scene are pulling the strings... he just fondles the young girls)  

[o_e_l_e_o]

1.
a miner does not take responsibility of assets on behalf of another person
as thats called custodianship

The wording of the bill says nothing about requiring anyone to take responsibility of assets on behalf of another person. It states if you provide a service which makes transfers, which is exactly what miners do.

2. there has not been multiple attempts IN THE HOUSE and senate..

Yes there have.

Amendment 2466: Strike provision relating to information reporting for brokers and digital assets
Amendment 2498: Revise the rule of construction re. information reporting for brokers/digital assets
Amendment 2617: Revise rule of construction with respect to information reporting for brokers/digital assets
Amendment 2619: Revise rule of construction with respect to information reporting for brokers/digital assets
Amendment 2627: Revise rule of construction with respect to information reporting for brokers/digital assets
Amendment 2644: Revise rule of construction with respect to information reporting for brokers/digital assets
Amendment 2645: Revise rule of construction with respect to information reporting for brokers/digital assets
Amendment 2650: Revise rule of construction with respect to information reporting for brokers/digital assets
Amendment 2651: Revise rule of construction with respect to information reporting for brokers/digital assets
Amendment 2656: Clarify definition of a broker for digital assets

3. to emphasise again
no miner takes responsibility for other peoples funds nor does a miner process a transaction.

Again, the wording does not require them to take responsibility for other people's funds. It simply requires them to provide a service which effectuates transfers.

4. oeleo is(secretly contradictory) not afraid of bitcoin full node/miner/dev users being deemed brokers. his real fear is actually on his favourite altnet LN where routing is involving the hot potato movement of funds on behalf of other people.

Your strange obsession against Lightning is irrelevant.

not in all cases.
seriously it is obvious you have never run a business or even done any transaction of any kind above $10k personally yourself.
..
people dont 'file a return' everytime they send or receive $10k
in fiat world.. the BANK does that for you.. because THEY are the MSB (money service business)

And when you hold your own bitcoin in your own wallet, there is no bank to collect these details and so legally you must do it yourself, just as you would if you were accepting cash. Which is exactly what Section 6050i I linked to above talks about - cash trades - and not payments through a bank or other institution.

[franky1]

1.
a miner does not take responsibility of assets on behalf of another person
as thats called custodianship

The wording of the bill says nothing about requiring anyone to take responsibility of assets on behalf of another person. It states if you provide a service which makes transfers,

and under your same logic. it does not mention mining development nor node users

again miners do not effectuate transfers.
please buy a friggen asic and try to find the hard drive/ram that contains transaction data

as for your blindness... it never mentions miners, nodes or developers.. although you think it does
it does mention 'responsible' and 'on behalf' of which you think it doesnt

any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.

it does not say anything about accounting historic transfer data
it does not say anything about software development by volunteers
oh and in fiat world. a cheque clearing house is a separate business to a bank. and the cheque clearing house that validates checks in batches never does the reporting. the bank(custodian) does
so please do some friggen research on the real world not what you read on twitter
oh and also in fiat (real)world the software developers of visa, cheque clearance houses, and banks are not brokers.

so try to read.. and then do research on actual money service businesses
this is the multiple time i have asked you to do some research and the multiple time you have played ignorant thinking your right 'coz twitter'

if your life revolves around auto-belief in twitter messages. then your just as bad as the flat earth trump 2020 crowd.

oh and also learn a bit about bitcoin (not your altnet pretending to be). you know learn how transactions work. like learn about signatures. then realise to effectuate a transfer means having signature authority to effectuate transfer
meaning to have responsibility to effectuate transfer on behalf of someone else you need to be a custodian

And when you hold your own bitcoin in your own wallet, there is no bank to collect these details and so legally you must do it yourself, just as you would if you were accepting cash. Which is exactly what Section 6050i I linked to above talks about - cash trades - and not payments through a bank or other institution.

the quote is about businesses that do transfers for others.. again learn about custodians aka money service businesses..
the quote is not about individuals signing their own transactions.. again meaning not node users. its, if you read the quote businesses that offer a service on behalf of others.. aka custodians(because they have the private key of funds belonging to others)

.. please do some research beyond what you find on twitter campaigns. it might help you learn something

[o_e_l_e_o]

-snip-

And you think our politicians understand any of that? Most of them can't even tell you what bitcoin is, let along what a miner is or what they do, and most will never even have heard of the term ASIC. If you want to phone up every member of Congress personally along with all the people at the IRS and tell them just to ignore the legislation, it's all fine because you and you alone have figured out the one true interpretation of it, then be my guest.

The bottom line is it does not matter how you or I interpret it. All that matters is how the people who are going to be enforcing this law think, and as I've shown above many of them are interpreting this law to apply to nodes and miners as well.

the quote is about businesses that do transfers for others.. again learn about custodians aka money service businesses..

The exact wording from 6050i states "Any person who is engaged in a trade". If you go through a centralized exchange, then yes, they will already have all your KYC details and ware already reporting you to the IRS. But now, if you trade bitcoin cumulatively worth more than $10,000 peer to peer, whether it is for goods, services, fiat, altcoins, whatever, then at least one party is now responsible for collecting the KYC details of the other and reporting them to the IRS.

[Ucy]

If I understand this correctly,  running nodes on/in your private property(laptop, PC, phones, home etc ) which is more like owning piggy bank or wallet could be considered evil unless certain rules are followed?
Hope lawmakers understand that the purpose of Law is to guide us to do what is right not prevent us from doing what is right.

[BrianH]

Reminder - this will be signed Monday by President Biden. The full law will go into effect then.

Could Bitcoin be banned entirely? Coingeek had a really interesting article about the upcoming Taproot softfork (which coincidentally goes into effect the day before the US officially illegalizes many aspects of crypto), may place Bitcoin as a "privacy" coin. It apparently adds an obfuscation level where transactions from different users are pooled together and linked to one hash. It sounds kind of like a built-in coinjoin or weaker version of Monero's ring signatures. I am all for enhanced privacy and making crypto operate more like money, but I also recognize the government may see this as a threat - they do need tax to function. The existing tax structure would have to change, if consumers gain privacy through crypto and they can't monitor everyone's spending through banks.

On developers and privacy, the article says:

In reality, the situation is always different. In the early days of BTC and other digital assets, users could even sign up for trading accounts on exchanges like Coinbase without providing anything more than an email address. As serious money began to flow into the ecosystem, that changed quickly. Most exchanges now have strict identity and KYC requirements to sign up for an account, and even those that don’t are constantly under scrutiny and fire for their actions. U.S. federal agencies shut down BTC-e completely and confiscated its wallets. Binance is a frequent target for investigators.

At the very least, governments can make it difficult for people to use digital assets. Anonymity concerns have already seen “privacy coins” like Monero delisted from several major exchanges. BTC itself is extremely limited as a payments network, perhaps by design—this means relatively few actually accept it as money, which in turn means most BTC holders need fiat gateways to use BTC value in the real world. And governments control those gateways, quite easily.

Developers themselves could be put under pressure. Despite their claims that they are merely coders and thus not subject to financial regulation, there are plenty of arguments to support the case that they are indeed fiduciaries—that is, they are just as responsible as companies, banks and exchanges that actually hold assets.

On miners, the article says (to put another nail in the coffin of the argument that mining won't be considered an illegal activity):

In testimony before U.S. Treasury Secretary Janet Yellen’s President’s Working Group on Financial Markets, Walch said the notion of “censorship resistance” was perhaps “overstated” and pointed to miners as intermediaries that could be held accountable for the transactions they verify and commit to the blockchain. She said:

“While many characterized crypto systems as lacking intermediaries and enabling the direct transfer of value between transacting parties, that is technically untrue. Transactions do not appear on the blockchain record unless a miner chooses to put them on.”

If I understand this correctly,  running nodes on/in your private property(laptop, PC, phones, home etc ) which is more like owning piggy bank or wallet could be considered evil unless certain rules are followed?
Hope lawmakers understand that the purpose of Law is to guide us to do what is right not prevent us from doing what is right.

That is correct. You will be a lawbreaker.

[o_e_l_e_o]

Coingeek had a really interesting article about the upcoming Taproot softfork

I've just read through that article, and I must say, it is absolutely trash. It sounds like he has no idea what Taproot or its associated changes are going to do.

"Taproot is essentially a mixing service"? What is he even talking about?

"Developers and reporters are usually careful to say 'privacy enhancements' instead of 'anonymity'." That's because it doesn't make you anonymous by any stretch of the imagination?

Figured I would check out the author since his article is such utter nonsense. Turns out he's a BSV shill who thinks known fraudster CSW is Satoshi. Lol. No wonder he doesn't know what he's talking about, but still wants to somehow twist it in to negative press for bitcoin.

As much as this law is obviously terrible and should be fought, this article isn't even worth the non-existent paper it isn't written on.