How the Infrastructure Bill Will Affect Cryptocurrency

It is scarce for governance itself to affect cryptocurrencies. For many years, crypto insides have asked for crypto regulations and transparent rules for the industry. While the infrastructure bill won’t do that, it will affect the crypto space nonetheless.

Currently, the infrastructure bill is in the U.S. House. The piece of legislation carries a great deal of importance to the Biden administration. But, what does it mean for crypto?

A Background to the Infrastructure Bill

On August 10, 2021, the United States Senate passed the infrastructure bill. The piece of legislation looks to allocate $1.2 trillion towards improving infrastructure across the United States significantly. Known as the Infrastructure Investment and Jobs Act, this bill is now in the House of Representatives and is looking to pass. If it does, both houses of Congress will need to reconcile their versions. Also, they will have to present a final draft to President Biden.

The Infrastructure Investment and Jobs Act is 2,702 pages long. It results from a bipartisan agreement, with both parties looking to find a way to improve American infrastructure. The bill contains $550 billion in new spending, although additional funding gets allocated annually. In total, the bill has $1.2 trillion in funds separated and ready to go.

As part of the bill, we have:

  •   $110 billion to go towards improving roads and bridges across the country
  •   $66 billion to improve and maintain the railroads and rail transport
  •   $65 billion for updating power cables and lines
  •   $65 billion for expanding broadband internet access to rural areas and low-income communities
  •   $55 billion for improving America’s water infrastructure
  •   $47 billion to combat climate change and cybersecurity issues

And on and on it goes.

What Does the Bill Mean for Crypto?

A large part of the bill doesn’t even mention cryptocurrencies. However, there is a significant stipulation that has drawn the eye of industry insiders.

One area that has drawn attention in the infrastructure bill is the government’s requirement for crypto transfers. Essentially, the government is looking to impose stricter reporting standards on transfers of cryptocurrencies. These standards will cover transfers from brokerage services to non-broker accounts. So, these crypto brokers will need to report to the Internal Revenue Service (IRS).

Take stockbrokers, for example. Most companies have to report their customers’ sales to the IRS regularly. The infrastructure bill is looking to bring the same standard to crypto brokers. The move could result in tighter regulation of the crypto industry, especially when it comes to tax compliance.

Congressional accountants estimate that this could result in about $28 billion in revenue for the government over ten years. In turn, the government could use these revenues to pay for several things listed in the infrastructure bill.

Is This a Good Thing?

By expanding reporting requirements for crypto brokers, the infrastructure bill could help crypto. If anything, it will clear up some of the vagueness that has surrounded the industry for so many years. So, besides bringing in more tax revenues to the government, this requirement will also enhance the legal classification of cryptocurrencies.

However, there are some drawbacks to this proposal as well. Most importantly, the law doesn’t necessarily define who a “broker” is. For all we know, the government could classify some people as brokers, unlike how it does with the traditional market. So, people who wouldn’t fit the “broker” description would have to meet these reporting requirements.

We already know who crypto brokers are – exchanges, trading platforms, etc. But, the infrastructure bill could expand that definition also to cover stakers, software developers, etc. As expected, this law could make it more difficult for individuals and small businesses to thrive in the crypto space.

What to Expect?

This brings us to the second problem. While crypto brokerage services like exchanges and trading platforms have customer data, others don’t. For example, many actors in blockchain do not have access to their customer data because of the industry’s nature. Among them are node validators, software developers, stakers, and more.

So, they will now have to report data that they don’t have to the government. So, by definition, compliance with the infrastructure bill’s requirements will be impossible.

Another aspect that seems to be causing controversy is the bill’s Tax Code Section 6050I. According to a crypto advocacy group, this section could make receiving digital assets illegal if they aren’t correctly reported. The tax code applies to anyone who gets over $10,000. These people will have to register their sender’s information to the government, per the code.

The section could be challenging. Apart from obtaining data, it could also reduce businesses’ desire to use cryptocurrencies for payments. On the other hand, if they have to report everyone that sends them over $10,000 in crypto, what’s the point?

So, What’s Next?

For now, the world waits to see if the infrastructure bill will pass in the House. Speaker Nancy Pelosi delayed the vote early on Friday, showing that the Democrats don’t have enough votes to get the bill to pass. But, it should do the account within the next week or two.

Bitcoin live price
price change

If the infrastructure bill does pass, the crypto industry will need to spend more effort to point out its flaws. It is worth noting that the legislation in itself isn’t bad for crypto. But, it’s not the perfect foundation to stand on as we await proper regulation.

Stay up to date with our latest articles

More posts

Terra 2.0 Airdrop is Live: Here’s What You Need to Know

Terra isn’t dead: the network is back up and running on a new blockchain, focusing on a more decentralized governance model. The community is making no attempts to revive its recently failed TerraUSD (UST) stablecoin. It has, however, re-launched a new version of the LUNA governance token, restarting its supply at 1,000,000,000 tokens. Here are the facts on the new blockchain, why it was launched, and the new token’s airdrop/ distribution. Background on Terra 2.0 Terra 2.0 (now known formally…

Marhaba DeFi Network Introduces Halal Certification for NFTs

A strategy to penetrate the $3 trillion Islamic market.   Marhaba (MRHB), a Muslim-centered DeFi platform, is launching the world’s first Sharia-backed NFTs certification.  The system involves a process where NFTs projects will be submitted to a Sharia administrative board. This panel will review the artwork’s compliance with Sharia Modesty and ethical code. Halal NFTs receive a Blockchain minted certificate curated by Sharia Experts LTD, an Islamic advisory platform for web3 projects.  Mohammed Naquib, the founder of Marhaba, explained how…

India Leads 26 Other Countries in Terms of Play-to-Earn Adoption

According to a recent NFT research, India ranks first among 26 countries on the basis of play-to-earn (P2E) gaming adoption. Indian Players Outnumber Hong Kong's and UAE's As per the survey, approximately 34% of respondents in India have experience with play-to-earn games. To be clear, play-to-earn games are blockchain-based games in which players receive incentives with real-world value. Since the outbreak of the pandemic and the rise of the work-from-home culture in India, the popularity of P2E games has soared.…

Cynthia Lummis Drops Reveal Date for Landmark Crypto Legislation

Senator Cynthia Lummis (R-WY) has given a specific date for when her long-awaited crypto regulator bill will be unveiled. The legislation will help to sort cryptocurrencies under appropriate regulatory labels and federal jurisdictions. According to a tweet from the senator on Friday, the final version of her bill will be released on Tuesday, June 7th. Lummis has spent months working on the bill alongside Senator Kirsten Gillibrand (D-NY), announcing it as early December 2021. The bill will reportedly provide sweeping…

Cardano Founder Lobbies for Favorable Laws in Washington

Cardano Founder Charles Hoskinson has shared details of a week-long trip to Washington D.C, where he met with US lawmakers to discuss crypto-related policies. In a Youtube video, Hoskinson related his conversations which he says are another step towards changing how regulatory entities view the crypto industry. Crypto Policies in Need of Major Work Charles Hoskinson has reportedly spent the past few days mulling over the best course for regulation. In fairness, Hoskinson has always pushed clarity in government interactions…

Terra Holders Approve Proposal to Burn 1B UST from Community Pool

Terraform Labs has announced plans to burn 1.3B UST from the community pool following a successful governance vote. After the "Rebirth of Terra" passed some days ago - the burn proposal is the latest in Terra's ultimate revival plan.  Terra will Absorb the UST Supply On Thursday, the burn idea, proposal 1747, passed with staggering support from the Terra community. 99.3% of participants in the vote (154.579 million) pushed for TFL to destroy a huge part of the UST supply. …

How Can You Determine the Rarity of an NFT?

The rarity of a non-fungible token (NFT) is one of the most often debated topics on the internet. The rarity of an NFT is one of the most critical elements in determining its value. Understanding how rarity works is a significant advantage for anyone investing in the NFT market. How can traders learn to measure this feature for any digital asset? Our guide today will share more insight on this critical aspect. Is It Possible to Measure Rarity? There has…

Twitter Agrees to Pay $150 million Fine for Invading Users’ Privacy

Twitter has consented to pay a $150 million sanction to the US Department of Justice (DOJ) and the Federal Trade Commission (FTC). The payment is a settlement for an invasion of privacy charge by the US government. The complainant maintained that Twitter had released users' private information to help advert companies target customers. The Breach Explained Per a complaint on Thursday, the Social Media behemoth allegedly retrieved customers' cell numbers and email info under false pretenses. According to the charge, …

Most NoCoiners Simply Don’t Understand Bitcoin, Finds Block Study

Jack Dorsey’s financial company Block has unveiled a survey from January examining top reasons that people don’t buy Bitcoin. The top reason, cited by 51% of respondents, was that they simply don’t understand it well enough. Conducted in partnership with Wakefield Research, the study surveyed 9500 people across 14 different countries. Besides the lack of knowledge, other common reasons for avoiding Bitcoin included cybersecurity risks (32%) and price volatility (30%). Among those that refused to buy Bitcoin despite sufficient knowledge,…

Federal Reserve Vice Chair Backs CBDC Issuance, Despite Republican Backlash

Lael Brainard – vice chairwoman of the Federal Reserve – showed support for a US CBDC at the House Financial Services Committee hearing on Thursday. She believes one could bring more efficiency to the financial system, but Republicans are staunchly opposed. Potential Need for a CBDC In advance of the hearing, Brainard issued a written statement discussing the pros and cons of a CBDC in the United States. When framing her argument, she first acknowledged the recent instability of private…