Monday, August 9th, 2021
US Bitcoin fans in an uproar
Infrastructure plan could “kill” crypto companies
An inconspicuous ancillary provision in Joe Biden’s billion dollar infrastructure law threatens the US crypto scene. Among other things, so-called miners are set unsatisfiable conditions. But not all Bitcoin supporters support the effort to change the law.
With a gigantic spending package, US President Joe Biden wants to modernize the American infrastructure and stimulate the economy after the Corona crisis. For months, the US parliamentarians have been negotiating how many hundreds of billions of dollars should be invested, how and where in roads, bridges, and energy supply. But shortly before the gigantic investment plan is passed, the American crypto scene unexpectedly finds itself at the center of the debate. The young industry does not belong to the group of those who are supposed to be funded with all the money. On the contrary: it should pay for the infrastructure package with the help of stricter reporting requirements.
The part of the law that contains the financing of the $ 550 billion new spending stipulates that a tightening of the previously lax taxation of cryptocurrency transactions will raise an additional $ 28 billion over the next ten years. But it’s not this sum that the community has been up against for days. Crypto miners, stock exchange operators, developers, investors and service providers of all kinds are terrified by a sentence in the relevant paragraph that – as some fear – could “kill” the entire industry in the US, as Jake Chervinsky of the American lobby group says Blockchain Association warned. Or at least drive them out of the country.
In the original draft law, for example, everyone who is “responsible for this and regularly offers services that bring about the transfer of digital capital” should be subject to tax reporting obligations like securities brokers. This means that these companies and persons would have to report detailed names and data on each participant in corresponding crypto transactions to the tax authority (IRS). This is simply impossible for Bitcoinminers, for example, who verify transactions on the blockchain, the decentralized register of the cryptocurrency. It would be “practically a ban on mining in the US,” as Chervinsky said on Twitter.
The first indications of this part of the law were followed by a mobilization that was so far unique for the young crypto industry. Companies, lobby groups and numerous prominent crypto supporters from Twitter founder Jack Dorsey to Kiss guitarist and investor Gene Simmons campaigned for a change in the law and called for the senators concerned to be called directly or emailed. This campaign was successful in that MPs from both parties tabled two amendments to the Infrastructure Act. However, none of them could be incorporated into the draft law in time for the vote in the Senate, which will probably take place today, with the necessary approval.
The fate of the US crypto industry is by no means sealed. The Infrastructure Act is still to be dealt with in the House of Representatives. There are still chances of making a change there. However, not all representatives of the crypto scene are in favor. Some so-called Bitcoin maximalists have sharply attacked lobbying efforts in the past few days. The logic: Bitcoin itself was expressly created and able to stand against state bans and regulation. The elaborate campaign – also with the help of expensive lobby companies – only serves the interests of a superfluous service industry around the original crypto currency as well as the protection of inferior alternative currencies. One Bitcoin supporter compared the efforts of the industry with those of lobbyists “who take money from the big tobacco companies to defend cigarettes”.