Tuesday, August 16

The 8-word crypto amendment in the infrastructure bill is an ‘affront to the rule of law’

Legal experts have warned that a section of the Infrastructure Bill, due to vote today, amends a part of the tax code and causes companies and individuals not to report digital asset transactions as a criminal offense.

University of Virginia Law School professor Abraham Sutherland said it’s a separate provision from the controversial “corridor” provision that got all the attention when the bill was 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 entirely. Instead, it imposes reporting requirements that, given the way DeFi works, would make compliance impossible. “

Meltem Demirors, CSO of CoinShares, expressed concern on Twitter about what he considers the unconstitutional and anti-American nature of the amendment.

The amendment to section 6050I it is part of the infrastructure bill, which is scheduled to be voted on in the House of Representatives today, Nov. 5.

Since 1984, section 6050I of the tax code requires businesses and individuals who receive physical cash or a wire transfer in excess of $ 10,000 to file Form 8300 and report the sender’s personal information, such as name, address, and phone number. Social Security to the IRS. The eight-word amendment to the new bill includes “any digital asset” in the definition of “cash.”

Related: US Senator Files Resolution To Allow Crypto Payments At Capitol Complex

This raises obvious privacy concerns when applied to DeFi 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 drug war throughout the 1980s. She said, “This really isn’t so much about taxes, it’s about fighting against crime “.

If the 6050I is applied to digital asset transactions, businesses and many individuals who fail to report the sender information of digital assets to the IRS would be considered criminal offenders. However, banks and other financial institutions are exempt. Sutherland wrote in an article about DeCential explaining the ramifications in detail and concluded that the amendment would be costly, impractical and dangerous.

“The amendment to section 6050I is an affront to the rule of law and the norms of democratic law. It quietly slipped into a 2,700-page spending bill, purportedly as a tax measure to defray the bill’s $ 1 trillion price tag, even though section 6050I is indeed 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 part to pass the legislation.