How would the US crypto bill impact you?

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Are they coming for your crypto or you?

The document of this crypto bill is written by someone who does not like crypto.
That seems to be the feeling one gets as one digs deep in an attempt to find more about the crypto tax proposal.
Some of the more informed people about the subject such as the house Financial Service
committee Patrick McHenry stated that the “Biden's crypto tax proposal ”
is an attempt to kill the adoption of crypto in the U.S.

Talking about the new tax regulation McHenry, a North Carolina republican, made a statement indicating that the new proposal lacked Clarity and urged for Clear rules in this regard.

Joe Biden’s proposed bill can make it mandatory for crypto exchanges to report transactions to the the revenue service the IRS

If this is made into a law then it would be the responsibility of the crypto exchange to report the customer information to the IRS ( InternalRevenue Service)

The rule once implemented is going to dictate a number of things to the crypto industry.

It would deem any platform that facilitates the buying and selling of crypto assets as a broker.
It would be the task of the broker to report the transactions to the tax department.

The new bill extends to the DEX as well

The rule would extend the definition of a broker to a decentralized exchange DEX as well.
Currently trading on a DEX does not require any kind of KYC.
However if this becomes a law KYC mandate would be implemented for every DEX

What would be the difference between a CEX and a DEX?

Usually a KYC is one of the main differentiators that helps a user differentiate between a CEX and a DEX.

Another pillar on which a DEX stands is the user's wallet. Since the user keeps the control of his keys and his funds.

The bill intends to bring the wallets under the purview of regulation. As the wallets can facilitate fund exchanges so would have to report the transaction and be treated as a broker.

MetaMask usage would need KYC ?

Since wallets like MetaMask and TrustWallet have the option to exchange crypto as an inbuilt option therefore would be deemed to be a broker and need to furnish the transaction details to the IRC.

How do the Metamask and TrustWallets of the world report transaction details?

This is an intriguing question as no personal information is submitted to create the wallet nor for
Carrying out the decentralized exchange via the wallet.
Would this mean a KYC would be needed to create a Metamask or Trustwallet crypto wallet?

Is this bill only for USA?

The scope of the bill is the the american land and its citizens.
However Crypto is global and USA has a global clout. With its control over agencies like IMF, FATF and practically so many decision making bodies of importance chances are that “IF” this bill is passed the US government may try to press other countries to pass and implement such a bill in their respective countries.

What if this bill becomes a law?

If this were to happen there is a fair possibility that start ups in the field of crypto and blockchains would migrate to more crypto friendly territories.

How could this play for defi?

A lot of the US money flows into or intends to flow into crypto, blockchain and defi space.
If businesses and startups move out of the US then it could block the flow of the US funds into this industry.
This lack of funds could possibly decelerate the pace of development for the industry.

How scared should one be about this bill?

This bill has been made public with the intent to get feedback. This process would continue till November 2023.
This bill does not become a bill till 2024 if passed.
However 2024 is the year of the US elections.
In an election anything can happen and nobody knows who would come to power and what would be the fate of this bill.
Would this bill get passed or would it be put away in cold storage is something which only the future would tell.
Till then we can only hope that some pro crypto law makers are put in the position to make some sane and pro crypto decisions.

For the 2024 US election there might be some candidates who might play this bill and try to rally support by coming in support of suppressing such a bill.

Till then this bill is in limbo one can only say that the current administration is not at all crypto friendly while other parts of the world like Hong Kong, Dubai and other parts of the middle east are opening their arms to welcome and embrace crypto.

These are some of my thoughts. Feel free to go though the document and make your own opinion. Here is the link ) to the 282 page document.
Do go through it and let me know what you make of it.

Posted Using LeoFinance Alpha