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Last week, the U.S. House of Representatives passed a bipartisan $1.2 trillion infrastructure bill that includes the controversial cryptocurrency tax reporting requirement. President Joe Biden will now sign the bill into law.
The crypto industry was concerned about a tax reporting requirement within the infrastructure bill that expands the scope of a broker for the Internal Revenue Service (IRS). The reporting regulation would make all brokers report transactions under the current tax code.
Another provision that is included in the bill will amend tax code section 60501, which has also seen concern from the crypto sector. The law that was written almost 40 years ago would apply to in-person cash transactions over $10,000.
This essentially requires recipients to verify the sender’s personal information and record their social security number, why the transaction was done and report it to the IRS within 15 days of the transaction.
Congress gives crypto a gift of recognition
Although the cryptocurrency community fought hard in the Senate, it lost. The bill passed with the cryptocurrency provision, allowing it to then go to the House of Representatives where there wasn’t much opposition against the crypto provision compared to the upper chamber. But sometimes a loss can be viewed as a win.
The drama that came from the heated battle over the provision in the Senate placed the cryptocurrency sector on virtually the front page of every single news website and newspaper out there. Millions of more people are now aware of the industry and have begun investing in it, ushering in a new bull market.
We now see that the world’s richest nation an influencer of all nations to some extent takes cryptocurrency seriously and even legitimizes it by discussing it in the highest levels of power in the U.S government.
Simply talking about Bitcoin in the Senate from famous senators such as Elizabeth Warren, regardless of whether it’s negative, brings legitimacy to the industry. We lost this round, but Congress gave the cryptocurrency industry a gift of recognition and validity.
The good news is that the US government has indirectly legalized cryptocurrencies even before this bill passed through the House of Representatives. In October, U.S. Securities and Exchange Commission chairman Gary Gensler said that the regulator won’t follow China’s lead on banning digital assets and instead of that the government’s priority is on ensuring that the industry follows investor and consumer protection rules, anti-money laundering regulations and tax laws.
Gensler’s remarks echo those of Federal Reserve chairman Jerome Powell, who said during a September 30, 2021, congressional hearing that he had “no intention” of banning cryptocurrencies. All this news has helped strengthen the crypto industry not only in America but also across the world.
The infrastructure bill’s provisions embrace the industry
Now that we know that the US government has no intention of banning the crypto industry, the provisions in the infra bill and rules coming from other regulators demonstrate that they are trying to regulate it, make it safe for consumers and even embrace cryptocurrency.
The US government, in other words, is trying to capture the upsides of this exciting industry and manage the downsides, such as taxing digital assets to help pay for brand new infrastructure, which will help further build the country’s economy.
So, the provisions in this bill may seem like a bad thing for the industry. At the end of the day, crypto exchanges and other players now have clear rules, taking them out of the gray area into clear and transparent regulations.
Grassroots in action in crypto
I am glad that when the infrastructure bill was being debated in the Senate, the cryptocurrency community proved that we could come together as one s one family and turn into a force that can change and shape history.
Although the CEO and president of Coinbase, Brian Armstrong, said that the infrastructure bill was a “setback,” which it was. We saw how we are more than just young enthusiasts who want to help the world we are now an industry that is taken seriously by everyone, and we are just beginning.
I was proud to see Square, RibbitCapital, Coin Center, the Digital Chamber of Commerce, the Digital Assets Markets and Coinbase come together as one community to stand against the digital asset provision in the infrastructure bill while it was in the Senate.
I also applaud the work that Senator Ron Wyden and Senator Pat Toomey accomplished. With the help of some savvy social media campaigning by Fight for the Future, these groups successfully motivated thousands if not hundreds of thousands of crypto enthusiasts to call, email and tweet their senators, urging them to embrace the amendment that Senator Lummis and Toomey were advocating.
This campaign was impactful right away. Lawmakers from both houses of Congress and across both sides of the aisle were compelled to look into the provision and attempt to understand how it would impact the new and quickly growing cryptocurrency industry.
The future of crypto is bright
Now, as the infrastructure bill heads to Biden’s desk to be signed into law, I am confident that the cryptocurrency community is ready more than ever to unite and help advise on the development of regulation. There will be plenty of resistance, but our community is stronger and more resilient than ever before.
We in the cryptocurrency industry will continue to advise US lawmakers and policymakers across the world, ensuring that regulation is fair to the industry and society
Even though it may appear that the cryptocurrency industry has lost this battle, we have won a moral victory. The once-fringe cryptocurrency community is now legitimate a new industry that the world must reckon with.
As we continue to grow and bring millions of more people into the cryptocurrency industry, we know that when we come together, we can make a real and positive difference in shaping regulation in the digital assets industry all with the purpose of building a better and more sustainable financial industry.
Raymond Hsu is the co-founder and CEO at Cabital, a cryptocurrency wealth management platform. Prior to co-founding Cabital in 2020, Raymond worked for fintech and traditional banking institutions, including Citibank, Standard Chartered Bank, eBay and Airwallex.
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