This month’s passing of the $1 trillion U.S. infrastructure bill left the crypto community with a lot of unanswered questions. A provision of the new bill increases tax reporting requirements for cryptocurrency transactions, meaning brokers will have to complete a tax form and send it to the IRS starting in 2023. The tax reporting is also expected to bring in $2.8 billion each year for the U.S. government and serves as a funding avenue for expenses stated in the bill.
Crypto advocates heavily opposed the change, stating the new provision is too broad, vague and stifles innovation. The Blockchain Association, which recently raised $4 million in new funding, hopes to be a lobbying voice for those advocates as talks to amend the new requirements take place.
Founded in 2018, The Blockchain Association is a member-led trade association working toward clear, innovation-friendly regulations around cryptocurrency and other blockchain technologies. It represents 65 members of the blockchain community including the Digital Currency Group, Kraken and the Filecoin Foundation. These three organizations contributed to the BA’s recent $4 million funding raise.
“There’s this myth perpetuated by some that crypto is the Wild West, but that couldn’t be farther from the truth. The industry wants smart, regulatory guardrails in which to operate and innovate,” Curtis Kincaid, Blockchain Association (BA) director of communications, told Built In. “That’s how innovation takes place; when you know the rules of the road and can operate within them without having a team of lawyers to figure them out.”
Currently, the infrastructure bill’s cryptocurrency provision defines a crypto broker as any entity that plays a part in “effectuating” digital asset transactions. According to Bloomberg, that could include anyone from crypto miners to software developers to crypto exchange agencies, some of which simply don’t have access to the information they’d be required to report.
It also means investors with their own crypto wallet will have to report information that may not be accurate since it won’t give a clear view of how much they originally paid for the digital currency, according to NextAdvisor. To put it simply, the vagueness of the provision makes it difficult for people and businesses to know how to be compliant.
The BA aims to help shape the requirements of this bill and improve public policy around crypto networks through education and lobbying efforts. The BA says it welcomes regulation, acknowledging that proper reporting and preventing tax evasion is important, however, the organization believes the crypto community should be involved in crafting those policies. Instead of fighting the government, the BA hopes to work with government leaders to clarify regulations around crypto networks.
“As we saw during the bipartisan infrastructure bill debate, there is a lot of mistrust and misinformation that can lead to onerous, innovation-crushing regulations,” Kincaid told Built In in an email. “We are working hard to gain the trust of lawmakers and support future crypto growth.”
There is still debate among the crypto community about what kind of changes should be made to the infrastructure bill. Some argue the cryptocurrency provision should be taken out entirely. In fact, just last week Texas Sen. Ted Cruz introduced legislation to repeal the provision, calling it a “devastating attack” on the cryptocurrency industry. Others in the industry aren’t entirely opposed to the provision but say it needs to be more clear.
“More than ever before, the crypto industry needs a strong presence in Washington to ensure policymakers create commonsense regulations that support innovation, rather than stifle it,” BA Executive Director Kristin Smith said in a statement.
New funding means the BA can continue to expand its reach as a voice on Capitol Hill for the crypto community. The organization will also use the capital to hire new staff. It is currently hiring two new positions, one in industry affairs and one in marketing, but has more hiring planned for the next year.