The U.S. "Infrastructure Bill" that shook the crypto industry was officially signed. What impact will it have?

Wu said the author   |   Uncle Tan

Editor of this issue   |   Colin Wu

The process of signing and taking effect of the "Infrastructure Bill"

On November 15, US President Biden officially signed the "Infrastructure Act" (1), which means that the bill has officially come into effect. The bill covers all aspects of US infrastructure, including public transportation systems, roads and bridges, ports, railways, energy, broadband, and water and sewage treatment systems, etc., with a total investment of US$1.2 trillion.

The bill will also have a huge impact on the cryptocurrency industry. In this regard, Wu said Real published an article three months ago titled "[The entire process of the US crypto-related bill's struggle over 'brokers' has failed, but it will take a long time to land](2)". The bill clearly requires cryptocurrency "brokers" to report transaction information to the tax authorities, and the definition of brokers is "anyone who facilitates digital asset transactions on behalf of others". This definition of "broker" is too broad, so there are some dissenting members in both the Democratic and Republican parties. These opponents proposed corresponding amendments to redefine "brokers", but unfortunately it failed directly due to the opposition of an Alabama congressman.

Since the "Infrastructure Act" has been passed by the Senate, although some members of the House of Representatives called for the vague definition of "broker" to be revised during the September discussion, in fact, like most bills passed by the Senate, the "Infrastructure Act" did not encounter any resistance in the House of Representatives and finally came into effect after Biden's signature.

Impact on the cryptocurrency industry

Since the bill has come into effect, it also means that the following changes have been brought about in the cryptocurrency industry in the United States:

1. As a "broker", you must report detailed information on transactions exceeding $10,000 to the IRS;

2. As a recipient, when accepting cryptocurrency exceeding $1,000, you must verify the sender's information, record the other party's social security number (SSN), and other relevant information of the transaction, and report it to the IRS within 15 days.

In the field of cryptocurrency, centralized exchanges already have relevant reporting responsibilities. At the same time, as investors, they also face more complex tax reporting pressures.

After Biden officially signed the bill, Bitcoin fell 10%, and Bitcoin even fell below $60,000. The sentiment of the cryptocurrency market towards the bill is evident.

Possible future turnaround

In the "Infrastructure Act", the problem of overly broad definition of "broker" still exists. Due to the decentralized nature of blockchain, according to the current definition, both miners and full-node servers that process blockchain network transactions fall under the definition of "brokers", and Defi networks that process a large number of transactions also fall under the definition of "brokers". It is still unknown how the IRS will require miners and Defi systems to report in accordance with the requirements of the Infrastructure Act.

Regarding the definition of “broker”, members of both parties are still working on it. Senate Finance Committee Chairman Ron Wyden, a Democratic senator from Oregon, and Republican Senator Cynthia Lummis from Wyoming jointly drafted a [bill](3) to narrow the scope of cryptocurrency tax reporting. Both Wyden and Lummis are staunch supporters of cryptocurrency, and they were mainly responsible for writing the amendment in August. However, according to Bloomberg [report](4), it is still unknown when the bill they proposed can be voted on. There is a clause in the bill that can make it retroactive to the signing of the infrastructure bill.

Therefore, there is still room for improvement in the definition of “broker” in the infrastructure bill, but for cryptocurrencies, the increasingly tightening situation cannot be reversed.