Legal experts have warned that part of the infrastructure bill, which will be voted on Friday, would amend tax laws and prevent companies and individuals from reporting digital asset transactions as a criminal offence.
Abraham Sutherland, an assistant professor at the University of Virginia School of Law, said there is a separate provision from the controversial “broker” provision that drew attention when the bill was in the Senate:
“This is bad for all digital asset users, but especially bad for decentralized finance. The charter does not directly ban DeFi. Instead, it imposes reporting requirements that make compliance impossible, given the way DeFi works.”
Meltem Demirors, chief strategy officer at CoinShares, has expressed concern on Twitter about what she considers to be inherently unconstitutional and anti-American.
The Section 6050I amendment is part of the infrastructure bill, which is due for a vote on Friday in the House of Representatives.
Since 1984, Section 6050I of the Internal Revenue Code has required businesses and individuals who receive cash or wire transfers over $10,000 to file Form 8300 and provide the sender’s personal information such as name, address, and Social Security number. in the Internal Revenue Service. The eight-word change in the new law includes “any digital asset” in the definition of “cash.”
On this topic: US Senator Sends Permission for Crypto Payments in the Capitol Complex.
This causes obvious privacy concerns when used in decentralized financial transactions and cryptocurrencies and is useless for many projects.
On the October 26 episode of “Unchained with Laura Sheen,” Sutherland explained that Section 6050 I rapidly evolved into a crime-fighting tool in the 1980s war on drugs. “It is not so much about taxation as it is about fighting crime,” he said.
If the 6050I is used in digital asset transactions, companies and many people who do not report the sender’s digital asset information to the IRS will be considered criminals. However, banks and other financial institutions are tax-exempt. Sutherland wrote an article on DeCential, detailing its implications, and concluding that change would be costly, useless, and dangerous.
“The change to Section 6050I is a violation of the rule of law and democratic law. It has been billed to 2,700 pages, ostensibly as a tax measure to cover its trillion-dollar cost, even though Section 6050I is actually a costly enforcement item. It deserves attention now, while still There is time to stop it.”
With only 221-213 votes in the House and a united Republican opposition, Democrats need near-unanimity to pass the legislation.