There is rising concern about a proposed US law as $6000 was shaved off the price of bitcoin.
Bitcoin dropped from Sunday’s high of (AUD)$57,262 to $51,454 at 7am Wednesday as fears grow about the impact of the US President Joe Biden’s proposed $675 billion infrastructure bill.
Bitcoin has surged in recent weeks after a topsy-turvy year.
It took a dive when Elon Musk hinted Tesla might dump its cryptocurrency holdings in May.
A crypto clampdown by Chinese regulators in June also hit the price hard.
Now there are jitters about a provision in the infrastructure bill which could raise $37.81 billion from crypto investors, with some warning it could “kill” the industry.
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“This is a deeply misguided provision that, if adopted, will do far more harm than good to US interests,” lawyer Jake Chervinsky wrote in a lengthy Twitter thread.
He explained the bill would expand 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”.
That could lead to increased Internal Revenue Service reporting requirements.
The “brokers” may also been forced to collect customer data including names, addresses and phone numbers.
“This definition is so broad, it could apply to nearly every economic actor in the US crypto industry, if read literally,” Mr Chervinsky said.
“This sounds insane, but it really might happen.
“Most crypto legislation goes nowhere, so it’s easy to ignore. Not this time.
“This provision is part of the bipartisan and otherwise popular infrastructure bill, which is moving quickly through Congress and is highly likely to pass.
“First, it defies logic to adopt a regulation for which compliance is literally impossible, unless the goal is to kill the industry.”
The provision was included to essentially help fund the massive cost of the bill.
It must include “pay-for” provisions to raise revenue for new spending so that it’s revenue-neutral as a whole, Mr Chervinsky explained.
The Joint Committee on Taxation has projected that, collectively, the provisions in the bill would boost revenue by $68.87 billion.
IRS Commissioner Charles Rettig requested broader authority from Congress in June to collect information on cryptocurrency transactions.
Mr Rettig said that these transactions, by design, were often “off the radar screens”, while noting that the most recent market cap in the crypto world exceeded $2.7 trillion and more than 8600 exchanges worldwide.
An original revenue-raising provision that was struck from consideration after losing Republican support involved giving $50 billion to the IRS to beef up its enforcement and tax-collecting initiatives as means to crack down on filers who are not fulfilling their obligations.
Senate Majority Leader Chuck Schumer said he hoped to move forward with a vote on the infrastructure bill this week.
— with Fox News