Senate Infrastructure Bill Isn’t Perfect, But Could The Intention Be Right?

The provisions of the U.S. infrastructure bill have been hotly debated. However, the fears voiced by its critics appear to be misguided. The bill is over 2,700 pages of documentation, with a value of $1 trillion. After gaining clearance in the upper Congress chamber, the controversial infrastructure bill is now headed to the House of Representatives. Though the bill follows Financial Action Task Force (FATF) guidelines, the predictors are already declaring it as almost closed.

One of the key points of disagreement is section 80603 of the bill. The section defines a ‘broker’ as anyone who is ‘regularly providing any service effectuating transfers of digital assets on behalf of another person. An amended version of the bill demands that brokers report client information to the IRS. critics expected a much better and clearer definition. They fear that this wide definition will encompass everyone from node operators to miners and liquidity pool providers. An amendment that was supposed to exclude blockchain validators from the bill did not survive. This makes one wonder how the House lawmakers will finally amend the definition.

Cryptocurrencies mistake

The original definitions contained in the bill would be difficult to apply to the crypto ecosystems, as miners or holders do not “effectuate transfers” on someone else’s behalf. Centralized exchanges (CEX) and decentralized exchanges (DEX), as per cryptoverse, are the entities that transfer values between users and both are market makers. Capable brokers keep introducing compliance tools through updates for their respective platforms. CEXs, unlike most DEXs, file tax information to the IRS. Bringing them both under the same umbrella would not only be fair but will be seen as a perfect and uniform implementation of law. The fact that most DEXs have an owner who, apart from collecting the profits, also updates the open-source project dispels the myth that such entities have no central administration to enforce a change.

Critics feel that the approval of the bill could not only drive the crypto community out of the U.S. but also dent the country’s potential for innovation. Based on the standards issued by FATF, the crypto provisions of the infrastructure bill are implemented globally within different time frames. This dispels all fear of the end of innovation. The playbook, sooner or later, will be the same everywhere and the community understands that. They would take off only if their businesses are banned outrightly.

Another major concern is that upon filing customer data to the IRS, brokers will be forced to create databases listing the private information of their clients. Secure cryptographic algorithms of the crypto communities do not support the idea of any private data leaks. While there is no solid legal or logical reasoning behind these concerns, the crypto ecosystem could face challenges.

Once these changes come into effect, crypto ecosystems will need time and money for developing the algorithms and protocols to comply with changes. More compliance would lead to more mainstream adoption, which would mean more growth. The infrastructure bill isn’t perfect, but things like redefining ‘broker’, clearing myths of innovation and honeypots, and adapting to win are the positives that show the right intentions.