The latest US Government Infrastructure Bill, apart from costing a ridiculous $1 trillion dollars that the government will have to borrow from the Federal Reserve (who prints it out of thin air as usual), contains some bad news for crypto. I know, you're sick of FUD and probably feel like Mr Incredible wishing the world would just stay saved. Fortunately there are solutions which I will touch on later. If I had to try and summarise the bad news in a sentence, it would be, 'The IRS assumes that crypto is used for tax avoidance, so they will demand higher surveillance by brokers'. The problem is, they don't really explain or seem to understand what a broker is in the crypto world.
The bill essentially describes a broker as anyone who is involved in providing ANY service that effects the transfer of digital assets. What this means is that the IRS wants 'brokers' to collect data on anyone involved in the crypto space. Want to send some dogecoin to your mate, even as a joke? The IRS wants your name, your address, the time and date of your transaction, how much was transferred, the wallet addresses etc. If you don't know what a world with Central Bank Digital Currencies (CBDCs) looks like just yet, you're now getting a glimpse and it isn't pretty. Hopefully you also see why governments around the world hate cash and are trying to ban it; because it is hard to track and therefore harder to tax, and governments that are addicted to spending are addicted to more and more taxes.
Another reason this is a bad idea simply because the law is so broad. Obviously it would include exchanges, which is to be expected, so that's no massive change for centralised exchanges that already require KYC info and keep logs of your transactions. But think broader. Decentralised exchanges would have to track you and your transactions. That's not good. What about miners? Do they have to keep track of whose transactions they confirm? Will software developers like Metamask have to track your transactions too? How will these 'brokers' store your information safely and keep it out of the hands of criminals (or the feds, as Cyber Polygon ramps up)? And as good students of Bastiat, we have to ask what will be the unseen effects of this law? I would argue that it will incentivise crypto start-ups to move out of the USA, and (hopefully) incentivise people to move into privacy coins like Monero, especially with atomic swaps to BTC making good progress.
Dominic Frisby wrote two fascinating chapters on this whole subject in his book Daylight Robbery: How Tax Shaped Our Past and Will Change Our Future, called Crypto Money: The Taxman's Nightmare, and Data: The Taxman's New Friend. What we're seeing here is the beginning of this war between decentralised money and big data. It will only intensify as CBDCs become reality. Check out the book and follow Dominic's YouTube channel, he's a good writer and a smart person.
My advice? Start learning how to use Monero now, and stop using exchanges in the USA; use Tor (built into Brave) or a VPN if you must, but don't get complacent with your information being harvested by the government, it never ends well. If you're politically minded, call or write to your representative (if you're not in the USA, contact your own local rep) and tell them not to support cash bans, because the death of cash will signal the birth of CBDCs and the death of your financial privacy.