Infrastructure Bill passing US Senate: tighter rules on businesses handling cryptocurrencies
On August 10th, the Infrastructure bill passed the US Senate. Read our take on what comes next and what outcome is going to await the crypto community in the nearest future if the bill gets signed by the President.
Infrastructure bill: what had the US Senate offered?
The US Senate had offered an act: this was Joe Biden’s infrastructure plan which was supposed to stimulate the economy with the help of additional infrastructure construction. Such an infrastructure requires $1.2 trillion in financing. Among others, one of the investment sources was supposed to be an additional taxation implementation for crypto operations. For this to happen, the Senate had expanded the broker concept: it included the participants of crypto assets operations from that moment on. The participants became obliged to report information about the transaction participants to the IRS. The issue in such an amendment would lie in a way too broad definition of the broker: not only does it include genuine intermediaries and providers of digital assets services (like stock exchanges), but also individual market participants such as software developers or node validators and operators. Some further edits actually didn’t allow including non-intermediaries to be determined as brokers, but they didn’t pass, and the bill had moved on in its original form.
Does the bill still allow it to feature possible edits?
The fact that the bill has passed the US Senate doesn’t do anything until it has passed the House of Representatives and is signed by the President. Consequently, the current stage of working on the bill still allows it to feature possible edits or for the governors to conduct debates or discussions that will change the concept in question. Since a range of senators and policymakers possess the understanding of crypto-economy importance in the context of the USA general development ― which is noticeable at least from the fact they are attempting to launch their own CBDC ― there is a tangible probability that further discussions will bring the necessary changes to the bill so that the concept of broker remained more favorable for the crypto industry.
Two possible outcomes if the Infrastructure bill passes
There can be two possible outcomes.
Outcome one marks itself as possible consolidation of the crypto industry in the USA. Accepting compliance requirements is way easier for big companies rather than small ones, as the firsts simply have more resources to conduct such a change: they have economies of scale. This will lead to reducing the number of smaller providers with the simultaneous growth of the bigger ones.
The second outcome will mark an increased complication in launching new crypto ventures while at the same time it will be riskier due to the new legal requirements. Presumably, if the USA projects launch in different jurisdictions at first, they will only be entering the US market after maturing significantly.
As a result of the mentioned outcomes, the US crypto market will be less competitive and cease to develop at its current pace. Still, in a long-term perspective, the crypto industry is considered weighty and perspective enough so that its taxation alone can be regarded as one of the ways to finance infrastructure projects. It shows that American policymakers can see how crucial and prominent the crypto economy is, which, in turn, leads to the conclusion that there are only more such favourable regulations awaiting crypto in the future ― the ones that will facilitate the industry. There already have been positive precedents like Wyoming’s 13 new blockchain laws, which exclude a share of crypto operators from the notion of mining service business. Thanks to this amendment, it became easier to launch coins inside the state.
Conclusion about Joe Biden’s infrastructure plan
Even though the Infrastructure bills’ crypto amendments are slightly problematic, it only states how vital cryptocurrency is for the modern US economy from a long-term perspective. It’s witnessing the rise of the crypto industry’s credibility in the eyes of authorities and, controversially, gives hope for any further regulations to be even more loyal.