The legal experts have said that a segment of the Infrastructure Bill that is due for a vote on November 5, amends a part of the tax code. This amendment makes a failure by businesses and people to report digital asset transactions a criminal offense.
Thus, this proposed bill that is waiting for a vote in Congress has a ‘dangerous’ amendment. Abraham Sutherland, a University of Virginia School of Law lecturer, explained the situation. He said that it is a separate provision to the controversial ‘broker’ provision that gained all the attention when this bill was being discussed in the Senate:
“It’s bad for all users of digital assets, but it’s especially bad for decentralized finance. The statute would not ban DeFi outright. Instead, it imposes reporting requirements that, given the way DeFi works, would make it impossible to comply.”
The CSO at CoinShares, Meltem Demirors, raised her fears on Twitter about what she sees as the major unconstitutional and anti-American nature of this amendment to the Infrastructure Bill.
this bill is unconstitutional and inherently anti-American
private citizens have the right to financial privacy and financial freedom
absolutely shameful to see this https://t.co/O9FkVC2CF4
— Meltem Demir◎rs (@Melt_Dem) November 4, 2021
Notably, the amendment to section 6050I is a part of the bill that will come to a vote in the House of Representatives on November 5, 2021.Buy Crypto Now
What The Amendment Of The Infrastructure Bill Means
Since 1984, section 6050I of the tax code has compelled people and businesses that get physical cash or a bank transfer that exceeds $10,000 to file Form 8300 and report the sender’s personal information. The information about the sender includes their name, address, and Social Security number which is sent to the IRS.
The 8-word amendment in the new bill features “any digital asset” in the definition of “cash.” That now raises the obvious privacy issues when applied to decentralized finance and crypto transactions and is not functional for most projects.
Sutherland said on October 26 while speaking in the episode of Unchained with Laura Shin that Section 6050I rapidly evolved to become a crime-fighting tool in the drug war in the 1980s. He commented:
“This is not so much about tax, it’s about crime-fighting.”
If and when 6050I is applied to cryptos and other digital assets transactions; the people and businesses that fail to report the digital assets sender’s information to the IRS would be seen as felonious criminals. Banks and all other financial institutions are exempt from the new law. Sutherland wrote in a piece on DeCential explaining these ramifications extensively and concluded that the amendment would be expensive, unethical, unworkable, and dangerous.
“The amendment to section 6050I is an affront to the rule of law and the norms of democratic lawmaking. It was slipped quietly into a 2,700-page spending bill, allegedly as a tax measure to defray the bill’s trillion-dollar price tag even though section 6050I is a costly criminal enforcement provision. The proposal deserves attention now, while there is still time to stop it.”
With only a 221-213 majority in the House of Representatives and a united Republican opposition, the Democrats require near unanimity on their side to pass this legislation.