The Senate-approved infrastructure bill has been the subject of much debate in the crypto sphere, largely surrounding the expansive definition of “broker” as it relates to crypto transactions.
But another provision in the bill could impose new surveillance and reporting requirements on peer-to-peer crypto transactions, claims the Proof of Stake Alliance (POSA). And unlike other tax code reporting violations, violations of this provision – Tax code section 6050I – are felonies.
The law requires recipients to verify the sender’s personal information and record their Social Security number, the nature of the transaction and other information, and report the transaction to the government within 15 days.
POSA, a crypto lobbying group, called for the reporting mandate to be struck from the infrastructure bill in a report published Friday, calling it intrusive and overly broad.
Abe Sutherland, an adjunct professor at the University of Virginia Law School, penned the report.
Sutherland wrote that the provision has largely escaped public scrutiny because it uses a nearly 40-year-old law that was meant to apply to in-person cash transactions over $10,000.
Applied to digital assets, which could include cryptocurrencies and non-fungible tokens (NFTs), Sutherland believes that the law would be nearly impossible to comply with.
“The details are complicated and rely on sweeping Treasury Department power and discretion to apply the statute,” wrote Sutherland.
The provision is reminiscent of a proposed Financial Crimes Enforcement Network (FinCEN) rule published last December. Under that proposal, FinCEN would require all exchanges and wallets to collect KYC information for transactions and file currency transaction reports for entities or individuals transacting more than $10,000 worth of cryptocurrency in a single day.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.