Inside the infrastructure bill’s controversial crypto amendment and how its communities are pushing back

Joe Biden’s landmark 1.2 trillion-dollar infrastructure deal has polarized American politics, sparking contentious debate surrounding fiscal responsibility, quality of life, and employment. In recent weeks, an update to the bill regarding cryptocurrency taxation has ignited the cryptocurrency community, slowing down the U.S. Senate’s finalization of the bill. The alteration has potential to change the decentralized aspect of the crypto community and DeFi.

Within the Biden Administration’s infrastructure bill, a novel cryptocurrency tax provision has been at the center of controversy. In order to fund the trillions of dollars of spending outlined in the bill, a new amendment seeks to raise 28 billion dollars from cryptocurrency taxation with tighter compliance regulation. The new regulation alters the definition of a cryptocurrency broker and requires such brokers to provide tax reporting. According to the bill, a cryptocurrency broker is “Any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person”. The ambiguous broker definition could include miners, developers, decentralized exchanges, decentralized applications, and other non-custodial crypto service providers. Unlike banks and other custodians, cryptocurrencies operate in a decentralized manner, making it nearly impossible to obtain required tax information. At the moment, there are billions of dollars flowing through such services on a daily basis, with exchanges like Uniswap handling volumes of over a billion dollars a day. Such tax requirements will complicate the exponentially growing crypto space.

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James Chung

Founder and Contributor @DigitalBankr. I write exclusive research, analysis and market news on all things blockchain, including crypto-assets.