The U.S. House of Representatives enacted a $1.2 trillion bipartisan infrastructure plan that, if signed into law by President Joe Biden, will impose new crypto-tax reporting requirements on all residents.
The infrastructure legislation was first proposed by the Biden administration whose primary objective is to improve the country’s national transport network and internet coverage.
The bill, on the other hand, imposed strict reporting rules on the crypto community, requiring the reporting of all digital asset transactions worth more than $10,000 to the Internal Revenue Service.
A ‘flawed’ proposal?
The law was first adopted by the Senate on Aug. 10 with a 69-30 vote, prompting a compromise amendment proposal from a group of six senators: Cynthia Lummis, Kyrsten Sinema, Pat Toomey, Rob Portman, Mark Warner, and Ron Wyden, according to Cointelegraph.
Toomey stated, the proposal imposes “a profoundly flawed, and in some cases impracticable, cryptocurrency tax reporting rule that harms future technology innovation.”
Despite the bill’s lack of transparency, it wants to treat the crypto community’s software developers, transaction validators, and node operators in the same way that traditional banks’ brokers are treated.
After a 228-206 vote, the House of Representatives passed the contentious infrastructure measure to Biden.
Worries about clarity
Furthermore, the crypto community expressed worries about the ambiguous definition of the term “broker,” which could result in unrealistic tax reporting obligations for sub-communities like the miners.
Inability to disclose crypto-related earnings will be viewed as a tax infraction and crime as a result.
Legal luminaries advocated for changes to the infrastructure legislation that would make failure to record digital asset transfers a crime.
Concerns over the US government’s intention to label crypto sub-communities as brokers were raised by Abraham Sutherland, a lecturer at the University of Virginia School of Law.
“It’s awful for all digital asset users, but it’s especially disastrous for decentralized finance,” Sutherland said.
“The law would not outright prohibit DeFi. Instead, it sets reporting obligations that are impossible to meet because of the way DeFi works,” he added.
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