{"id":323744,"date":"2021-08-13T17:13:00","date_gmt":"2021-08-13T14:13:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/senate-infrastructure-bill-isnt-perfect-but-could-the-intention-be-right\/"},"modified":"2021-08-13T17:13:00","modified_gmt":"2021-08-13T14:13:00","slug":"senate-infrastructure-bill-isnt-perfect-but-could-the-intention-be-right","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/senate-infrastructure-bill-isnt-perfect-but-could-the-intention-be-right\/","title":{"rendered":"# Senate infrastructure bill isn\u2019t perfect, but could the intention be right?"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a27199135737\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a27199135737\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/senate-infrastructure-bill-isnt-perfect-but-could-the-intention-be-right\/#No_not_everybody_is_a_%E2%80%98broker\" >No, not everybody is a \u2018broker\u2019<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/senate-infrastructure-bill-isnt-perfect-but-could-the-intention-be-right\/#No_innovation_is_not_packing_up\" >No, innovation is not packing up<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/senate-infrastructure-bill-isnt-perfect-but-could-the-intention-be-right\/#No_there_wont_be_any_private_data_honeypots\" >No, there won\u2019t be any private data honeypots<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/senate-infrastructure-bill-isnt-perfect-but-could-the-intention-be-right\/#Win_by_adapting\" >Win by adapting<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># Senate infrastructure bill isn\u2019t perfect, but could the intention be right? <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDgvNTQyZDUwYzctZDk4OC00NTY5LWFmYzctM2NjNWUzZGRlZmI4LmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-128018ef>United States Senators have cast their votes, and the contentious HR 3684 infrastructure bill cleared in the upper Congress chamber. Now, the gigantic document of over 2,700 pages and amounting to almost $1 trillion is heading to the House of Representatives, including the provisions expanding the definition of a cryptocurrency broker, designed to beef up crypto and decentralized finance (DeFi) tax compliance. The $1 trillion can\u2019t come out of thin air, right?<\/p>\n<p>While the bill in effect simply follows Financial Action Task Force (FATF) guidelines, doomsayers are already declaring the end is nigh, haunted by visions of the dreaded Internal Revenue Service (IRS) coming for their coins. As usual, they\u2019re wrong.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Cryptocurrency mining under proposed US policy changes<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"No_not_everybody_is_a_%E2%80%98broker\"><\/span>No, not everybody is a \u2018broker\u2019<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>For critics, one of the key points of contention is that Section 80603 of the bill defines \u201cbrokers\u201d as anyone who is \u201cregularly providing any service effectuating transfers of digital assets on behalf of another person.\u201d Even this incredibly unclear language comes from an amended version of the bill, with an earlier one featuring an even broader definition. And yes, it could still be clearer. The bill demands that brokers report client information to the IRS but critics fear that with a definition this wide, it would encompass everyone from miners to node operators and liquidity pool providers.<\/p>\n<p>A compromise amendment was supposed to explicitly exclude blockchain validators from the definition, but it did not survive a vote, sunk by a defiant Senator. Even if House lawmakers do not amend this, it remains hard to see how the original language could be <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>lied to the broader crypto ecosystem, as \u201ceffectuating transfers&#8221; on someone else\u2019s behalf is simply not what miners or holders do. In the cryptoverse, the entities that are transferring value between users are centralized exchanges (CEX) and decentralized exchanges (DEX). They are the market makers. Both kinds of brokers are capable of introducing compliance tools through software updates for their platforms.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>Broker licensing for US blockchain developers threatens jobs and diversity<\/em><\/strong><\/p>\n<p>In the legal debates on content piracy back in Aug. 2007, BitTorrent wasn&#8217;t <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.cnet.com\/news\/fcc-formally-rules-comcasts-throttling-of-bittorrent-was-illegal\/\">found<\/a> liable for the enormous amount of copyrighted songs and videos shared freely via its peer-to-peer (P2P) protocol. Those leveraging the P2P protocol weren\u2019t as lucky \u2014 Lime Group, with its LimeWire web service, was <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.leagle.com\/decision\/infdco20100526c41\">deemed<\/a> liable for \u201ccontributory infringement\u201d in 2010. The difference was in how they approached the searches. With BitTorrent, you create a tracker for any specific file and share it on a third-party website to move it bit by bit around a network of users. LimeWire\u2019s network supported intrinsic search queries for audio and video files, thus facilitating the file transfers. LimeWire also had a recommendation system: If it saw you were downloading, for example, Spider-Man the movie, it would suggest you download Superman as well. In the same vein as BitTorrent, miners facilitate a generic transaction, not necessarily a value transfer. The value transfer is facilitated by the party that coordinated the transaction, which includes matching a buyer and seller with associated pricing information for a proposed transaction.<\/p>\n<p>And another point, CEXs are already filing tax information to the IRS, while DEXs mostly are not. Why aren\u2019t DEXs held to the same standard as CEXs and other services facilitating transfers of value, such as PayPal? Bringing them under this umbrella is not only morally fair and just, but it is a sound and uniform implementation of the law. And for those saying such entities have no central administration to enforce anything, consider the fact that DEXs most often still have an owner whose wallet is collecting the profits, and that most updates for open-source projects usually come from one and the same entity. Where there\u2019s a will, there\u2019s a way.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>More IRS crypto reporting, more danger<\/em><\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"No_innovation_is_not_packing_up\"><\/span>No, innovation is not packing up<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Critics also warn that the bill, if approved, could <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.politico.com\/news\/2021\/07\/30\/cryptocurrency-fears-tax-hit-infrastructure-501885\" data-amp=\"https:\/\/www-politico-com.cdn.ampproject.org\/c\/s\/www.politico.com\/amp\/news\/2021\/07\/30\/cryptocurrency-fears-tax-hit-infrastructure-501885\">drive<\/a> the crypto community out of the U.S., which would dent the country\u2019s potential for innovation. But fear not: There is nowhere to run anyway. As noted before, the crypto provisions of the infrastructure bill are based on the latest standards issued by FATF, a global body fighting money laundering. These standards are <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/general\/\" data-internallinksmanager029f6b8e52c=\"3\" title=\"General\" target=\"_blank\" rel=\"noopener\">general<\/a>ly implemented around the world, albeit within different time frames.<\/p>\n<p>FATF first put its sights on cryptocurrencies in 2019, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.fatf-gafi.org\/publications\/fatfrecommendations\/documents\/guidance-rba-virtual-assets.html\">urging<\/a> nations to tighten up the regulations on crypto exchanges. Since then, dozens of exchanges have been shuttered around the world for failing to comply with the respective local regulations inspired by FATF standards. Its latest guidelines take aim at DeFi and nonfungible tokens, or NFTs, so it\u2019s no surprise that decentralized finance is one of the targets on U.S. regulators\u2019 minds. The process goes beyond the United States: Europe is also moving to tighten up crypto regulations, consistent with other laws controlling value transfer.<\/p>\n<p>Sooner or later, the playbook will be the same everywhere. Most in the community understand that, and would hardly take off unless their businesses were outright banned.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"No_there_wont_be_any_private_data_honeypots\"><\/span>No, there won\u2019t be any private data honeypots<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Another very vocal concern is that having to file customer data to the IRS will force the brokers to create databases with clients\u2019 private information, creating a honeypot \u2014 a lucrative target for hackers. This idea does not account for the efficacy of the crypto and DeFi communities with secure cryptographic algorithms.<\/p>\n<p>Consider the zero-knowledge proof: A cryptographic concept that zooms in on how to prove to a third party that you know the value of a specific variable without saying anything other than you know it. Zero-knowledge authentication sees users, who hold their authentication data to themselves, sign in without revealing sensitive data to the platform. Implemented for DeFi, this kind of algorithm can generate any necessary forms required and send them to the IRS automatically without the need for the DeFi service to store the data on its own servers. Similarly, suspicious transaction reports can also be generated automatically and sent right to the regulator, with no need to inform other entities.<\/p>\n<p><strong><em>Related: <\/em><\/strong><strong><em>FATF draft guidance targets DeFi with compliance<\/em><\/strong><strong><em> <\/em><\/strong><\/p>\n<p>Finally, the point about surveillance and privacy also calls for another parallel with the <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">social<\/a> contract and written rules for other value transfers, especially for disclosing financial services. You can be as anonymous as you want while spending $100 in cash at your local store. To transfer $3,000 to a friend, you will have to share more information about yourself with the bank. And if you want to send $100,000 abroad, the bank or the customs entity will ask you more questions and the money will leave more of a financial trail. So, why should DeFi be any different?<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Win_by_adapting\"><\/span>Win by adapting<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>As we can see, most of the outcry about these possible regulations is not rooted in any real legal or logical reasoning. Yes, more compliance poses a challenge for the crypto ecosystem, as it would take time and money to develop the algorithms and protocols that will make it work. And yes, some people will have to part with some of their income from others\u2019 illicit dealings \u2014 not a significant chunk of the crypto ecosystem, anyway.<\/p>\n<p>The truth, as offensive as it may seem for crypto-purists, is that more compliance means more mainstream adoption, and more mainstream adoption means more growth. Blockchain-based financial services and applications do hold the promise of a revolution in finance, bringing real value to billions of users. Basic compliance with the law is hardly too much of a price to pay for that.<\/p>\n<p class=\"post-content__disclaimer\"><em>The views, thoughts and opinions expressed here are the author\u2019s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.<\/em><\/p>\n<div>\n<div style=\"background: rgb(239, 239, 239); border: 1px solid rgb(204, 204, 204); padding: 10px;\"><strong>Bob Reid<\/strong> is the CEO and co-founder of Everest, a fintech company that leverages blockchain technologies for a more secure and inclusive multi-currency account, digital\/biometric identity, payment platform and e-money platform. As a licensed and registered financial institution, Everest supplies end-to-end financial solutions, facilitating eKYC\/AML, digital identity and regulatory compliance associated with money movement. He was an advisor to Kai Labs, the general manager of licensing at Bittorrent and VP of strategy and business development at Neulion and DivX.<\/div>\n<\/div>\n<p><template data-name=\"subscription_form\" data-type=\"markets_outlook\"><\/template><\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/senate-infrastructure-bill-isn-t-perfect-but-could-the-intention-be-right\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# Senate infrastructure bill isn\u2019t perfect, but could the intention be right? &#8221; United States Senators have cast their votes, and the contentious HR 3684 infrastructure bill cleared in the upper Congress chamber. Now, the gigantic document of over 2,700 pages and amounting to almost $1 trillion is heading to the House of Representatives, including&#8230;<\/p>\n","protected":false},"author":1,"featured_media":323745,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDgvNTQyZDUwYzctZDk4OC00NTY5LWFmYzctM2NjNWUzZGRlZmI4LmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74862,74858,74894,74863,79096,71511,73434,55229,70934,70289,4965,67874,2199],"class_list":["post-323744","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-bitcoin","tag-bitcoin-regulation","tag-blockchain","tag-cryptocurrencies","tag-fatf","tag-government","tag-irs","tag-law","tag-regulation","tag-senate","tag-technology","tag-united-states","tag-washington"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/323744","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=323744"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/323744\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/323745"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=323744"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=323744"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=323744"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}