Legal experts have warned that A section of the infrastructure bill, to be voted on on Friday, modifies a part of the tax code and makes it a crime for companies and individuals not to report digital asset transactions.
University of Virginia School of Law professor Abraham Sutherland said that This is a different provision than the controversial “corridor” provision that attracted all the attention when the bill was in the Senate:
“This is bad for all users of digital assets, but it is especially bad for decentralized finance. The law does not directly prohibit DeFi. Instead, it imposes information requirements that, given the way DeFi works, would make compliance impossible. “
Meltem Demirors, Chief Strategy Officer at CoinShares, He raised his concern on Twitter about what he considers the unconstitutional and anti-American nature of the amendment.
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
This bill is unconstitutional and inherently un-American. Private citizens have the right to financial privacy and financial freedom. Seeing this is absolutely embarrassing
The amendment to section 6050I is part of the infrastructure bill, which is scheduled to go to a vote in the House of Representatives on Friday.
Since 1984, section 6050I of the tax code has required businesses and individuals receiving cash or a wire transfer of more than $ 10,000 to file Form 8300 and report the sender’s personal information, such as name, the address and the Social Security number, to the Internal Revenue Service of the United States. The eight-word amendment to the new bill includes “any digital asset” in the definition of “cash.”
This raises obvious privacy concerns when applied to decentralized finance and cryptocurrency transactions, and is unfeasible for many projects.
Sutherland explained on the October 26 episode of Unchained with Laura Shin that Section 6050I rapidly evolved to become a crime fighting tool in the war on drugs throughout the 1980s. He said, “It’s not really about taxes, it’s about fighting crime.”
If Section 6050I applies to digital asset transactions, businesses and many individuals who do not report the sender information of digital assets to the IRS would be considered criminals. However, banks and other financial institutions are exempt. Sutherland wrote in an article in DeCential explaining the ramifications in detail and concluded that the amendment would be costly, unworkable, and dangerous.
“The amendment to section 6050I is an affront to the rule of law and the norms of democratic law. It was quietly crept into a 2,700-page spending bill, purportedly as a tax measure to defray the bill’s trillion-dollar price tag, though section 6050I is actually an expensive criminal enforcement provision. The proposal deserves attention now, while there is still time to stop it. “
With just a 221-213 majority in the House of Representatives and a united Republican opposition, Democrats need near unanimity on their own side to pass legislation.
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