It's funny what happens when you actually "read the bill to see whats in it." We flipped through the proposed bill, down from $3.4 trillion, and found a new provision has been added that expands the Tax Code's definition of "broker" to capture nearly everyone in Crypto, including non-custodial actors like miners, forcing them all to "know your client (KYC)" users.
The bill expands the definition of a "broker" to include "any person who (for consideration) is responsible for and regularly provides any service effectuating transfers of digital assets."
Earlier drafts of the bill said "even if non-custodial" & explicitly included DEX & P2P markets. This definition is so broad, it could apply to nearly every economic actor in the US crypto industry, if read literally, and thats what they are counting on. That includes PoW miners & PoS validators, since "providing a service to effectuate transfers of digital assets for consideration" seems to fit both.
It might include a huge range of DeFi market participants too, like DEX LPs, liquidators, protocol governors, etc. Depending what "for consideration" means, it might also extend to non-economic actors like node operators or wallet developers, that's pretty much everything associated with all Crypto. The scope here could be massive and this is to deter people form become wealthy through avenues outside of owning a business or working a 9-5.
The Tax Code requires brokers to comply with IRS reporting requirements. Most importantly, they have to give Form 1099s to their customers & file them with the IRS too. To fill out Form 1099s, brokers have to collect customer data including name, address, phone number, etc.
This means brokers have to 'KYC' to comply with IRS reporting requirements. This is what McAfee was being brought back to Tennessee for, not paying taxes on crypto gains. The provision functions as a surveillance mandate, just like the one Sec. Mnuchin proposed in the final days of the Trump administration.
Anddddddd just as before, this is a very bad idea. They are looking to bypass the whole reason for crypto. As those who understand crypto already know, users are pseudonymous & access is permission-less. It's literally impossible for non-custodial actors like miners to get the information they need to do Form 1099s. I would venture the only way they caught McAfee was because they were watching bank accounts, spying on a US citizen.
In practice, this could mean a de facto ban on mining crypto in the US. This sounds insane, but it really might happen. (mining is electronically handling the transactions for a tiny fee, it is minutely profitable but needed in how Crypto is exchanged)
Most crypto legislation goes nowhere, so it's easy to ignore. But i'm thinking, "Not this time." I think it all points back to where Zuck wanted to make a facebook crypto, and the goverment sent him a memo and said, "thats not a great idea."
This provision is part of the bipartisan & otherwise popular infrastructure bill, which is moving quickly through Congress & is highly likely to pass.
What does crypto have to do with infrastructure, you may ask? The bill has to include "pay-for" provisions to raise revenue for new spending so that it's revenue-neutral as a whole. The "broker" definition is one of the pay-for provisions in the Senate draft of the bill. Other than a revenue source, absolutely nothing, its just pork-regulation.
There are three main ways to raise revenue in a bill like this: increase current taxes, add new taxes, or improve tax compliance. This falls in the third category, making people pay taxes they 'already' owe. Congress thinks crypto is full of tax evaders. (It isn't, its on your tax return, many, like me paid the owed taxes.)
The infrastructure bill is estimated to cost > $1 trillion. Congress scored the new "broker" definition at $28b in added tax revenue. I have no clue how they got this number, or how it's even possible to calculate. Regardless, this is no way to handle major new regulations.
If you're a US citizen, call your Members of Congress.
Find your House Rep: https://www.house.gov/representatives/find-your-representative
Find your Senator: https://senate.gov/senators/senators-contact.htm