U.S. Senate Vote in Favor of Amendment That Threatens Crypto Industry

https://decrypt.co/78038/senate-votes-for-amendment-that-threatens-crypto-industry

by creese • 5 years ago

144 159 5 years ago

Everything in the article leads me to believe this only threatens the “cryptocurrency” industry, but I don’t have the actual text to the amendment. Is anything threatening “crypto” itself?

meepmorp2• 5 years ago

No, and I hate that people shorten cryptocurrency to crypto.

dcolkitt7• 5 years ago

The term “derivatives” is widely used for financial derivatives like options and swaps. It’s gained such widespread adoption that it by far dwarfs the original meaning of the instantaneous rate of change in calculus.

I think the simpler answer is that when a word has two meanings, one a widely used category of financial instruments and the other a narrowly defined branch of advanced mathematics, the former will almost always dominate everyday discussion.

darksaints• 5 years ago

Do you also hate that cryptography is shortened to crypto?

zarzavat3• 5 years ago

The prefix "crypto" means hidden or disguised in English. Neither cryptocurrency nor cryptography have a monopoly on it. The way people get exercised about this issue you'd think that "cryptography" is the only word in the English language to use the prefix "crypto-".

tromp• 5 years ago

Seconded. I also hate that they shorten proof-of-work algorithm to "algo" (often just referring to the hash function used in the widely used Hashcash PoW).

atonse• 5 years ago

Yes thank you. I was alarmed in light of the Apple stuff that this is yet another attack on security.

gruez3• 5 years ago

comment from a previous discussion: https://news.ycombinator.com/item?id=28075226

the following categories do not count as brokers:
(A) validating distributed ledger transactions
(B) selling hardware or software for which the sole function is to permit a person to control private keys which are used for accessing digital assets on a distributed ledger, or
(C) developing digital assets or their cor- responding protocols for use by other persons, provided that such other persons are not cus- tomers of the person developing such assets or protocols.

jcranmer4• 5 years ago

That's Wyden's amendment to this amendment. The amendment in question here is saying that a "broker" now includes anyone

responsible for and regularly providing any service effectuating transfers of digital assets

(incidentally, I don't see how category (B) or even category (C) from Wyden's amendment could be reasonable construed as being included in the original text--those are products not services. I will concede that I can see how category (A) can be construed, although I doubt it would be so construed).

[Also note that "digital assets" is defined elsewhere in the amendment, although the news media didn't report on the precise text for digital asset, so I don't have it handy. But it's basically a reasonable definition.]

vishakh82• 5 years ago

If you think all cryptocurrencies are scams or think blockchains do nothing useful, please skip this comment.

If you think things like decentralized finance, storage and identity have the potential to improve our lives and offer some of the only genuine alternatives to an increasingly privacy-hostile status quo, please look into the shambolic legislative process that threatens the entire blockchain industry in the United States. This is the time to act and ensure that cryptocurrency provisions are debated meaningfully in Congress before any relevant legislation is passed. What the Senate is doing right now reeks of both outright incompetence and malice. There are many, many companies and builders active on HN who are about to have their existence challenged.

gameswithgo• 5 years ago

you have artificially tried to divide people into one of two extreme camps! cryptocurrency is either totally useless or the savior of the world!

Most of us do not believe either of those things. At the moment I apllaud any legislation that outs the brakes on current crypto currencies. The damage they have been doing to the world so people can gamble/speculate has been immense, its a tragedy. Money transferring to the lucky all while burning through energy.

vc99992• 5 years ago

You do understand that nobody forces anyone to gamble or speculate with cryptocurrencies, right?

dcolkitt7• 5 years ago

If your primary concern is the superfluous waste of energy you should be vehemently opposed to this amendment. It specifically exempts proof-of-work blockchains, while essentially outlawing alternatives.

It will drastically slow down innovation, and keep the majority of crypto activity on electricity guzzling proof of work chains. Already major Ethereum community members are discussing delaying or canceling the transition away from proof-of-work scheduled for the end of the year.

NateEag2• 5 years ago

How does being required to track data about taxation challenge the existence of the builders you mention?

I can see how it might for the companies - people who use crypto for tax and authority avoidance seem likely to stop using any service that complies with this law.

I don't see how this bill threatens any human's existence.

mcherm• 5 years ago

I don't see how this bill threatens any human's existence.

It doesn't.

How does being required to track data about taxation challenge the existence of the builders you mention?

Suppose US law says that it is illegal to "mine" a block of bitcoin unless you keep records of the true name, address, and social security number of every person whose transaction occurs within that block and provide that information to US banking regulators on demand.

Since the information available to miners does not include true name, address, and social security number, the only way to comply with such a requirement would be to not mine blocks for bitcoin.

(There's another option -- go ahead and violate this law. If the US government doesn't have a beef with you then they'll just choose not to prosecute you. If they DO have a beef with you then you can try arguing in court that the law is unconstitutional. This will take years and extremely large legal fees and it might or might not be successful.)

I don't have a problem with requiring Coinbase or Biance to maintain records of information available to them. I DO have some concerns with mandating that no transactions may be done anonymously except those done in cash -- although I understand that some may disagree on this. But I strongly oppose imposing impossible-to-meet requirements on those who write code for cryptocurrencies, perform "mining" of cryptocurrencies, or who hold and/or spend cryptocurrencies themselves.

gruez3• 5 years ago

discussed previously: https://news.ycombinator.com/item?id=28074809

Ajedi32• 5 years ago

Unless I'm misunderstanding something; I think this article is saying that the amendment being discussed in the post you linked failed to pass?

So I guess now we're back to the previous previous discussion where the EFF was decrying the bill as a privacy disaster: https://news.ycombinator.com/item?id=28045227

thanksforfish• 5 years ago

Relevant Senate links appear to be:

• https://www.senate.gov/legislative/LIS/roll_call_lists/roll_...

• https://www.finance.senate.gov/imo/media/doc/Wyden%20Lummis%...

repler• 5 years ago

There are a whopping 505 amendments for this bill.

Thank you for the direct link to the Wyden/Lummis/Toomey amendment.

I don't know how anyone can keep track of what a final bill would look like - seriously need something like Git to even keep up.

I think I understand now when folks in Congress complain they "don't know what they're voting for". They need better tools.

Here are all 505 if anyone is interested: https://www.congress.gov/amendment/117th-congress/senate-ame...

JediWing• 5 years ago

What are the reporting requirements? Will they lead to taxation? Overhead computing resource per block/transaction validated?

Is this reporting only, or will it result in additional taxes?

This seems light on details, and I really don't know what opinion to have on this without understanding what the requirements are. Nothing I've read succinctly explains this.

jcranmer4• 5 years ago

The same reporting requirements as banks. So the amendment is basically saying that anything that looks bank-ish in cryptocurrency terms will actually be treated as a bank for KYC/AML requirements. The consternation is that the "anything that looks bank-ish" is too broadly defined, but from my reading, it really isn't.

cs702• 5 years ago

WINNERS: Large corporations and financial institutions. They can afford the now-required overhead for all kinds of services, including transaction processing with fees and rewards, i.e., mining, and make a nice profit at high volumes.

LOSERS: Smaller service providers. They cannot afford the now-required overhead because they don't have sufficient economies of scale.

salawat• 5 years ago

What? You expected the U.S. Government to not go after maintaining the levers it needs to project power through economic control of who is allowed to transact what?

starkd10• 5 years ago

There are less heavy ham-fisted approaches they could take. But they don't seem inclined or even interested in knowing the topic well enough to figure out how to do so.

knorker5• 5 years ago

WINNERS: Rule of law

LOSERS: Criminals who saw so much hope in trivially laundering their ill gotten gains now see that as slightly less likely.

paulpauper• 5 years ago

If crypto does have a future it won,t be in the US.

cblconfederate2• 5 years ago

It never was

JumpCrisscross4• 5 years ago

I've been following this discussion in Washington and on Hacker News. I'm moderately anti-crypto--I don't buy the pitch but am open to being wrong and believe folks should be free to do what they want with it.

I've also been struck by the proliferation of bank-like services without bank-like obligations. This stretches from fractional-reserve and maturity-transforming services like Tether to exchanges/dealers like Binance and ersatz money transmitters like BitPay.

We need AML (edit: anti-money laundering) and tax reporting at those nexuses. If the answer is there should be no AML, KYC (edit: know-your-customer rules) and/or reporting by cryptocurrency companies, we have no common ground on this argument. To date, this is what I have most-commonly heard. If that's what the Senate is hearing, it's unsurprising they consider the debate closed. If the argument is a reasonable tweak to who has to report, or what or the form in which it must be reported, policy makers are listening. (Wyden's amendment is a result of reasonable concerns expressed by miners.)

danShumway2• 5 years ago

Wyden's amendment is a result of reasonable concerns expressed by miners

I'm honestly kind of surprised Wyden's amendment didn't get accepted. I guess I misunderstood the level of support it actually had; it seemed reasonable to me and I thought that most of the interest groups had gotten onboard with it.

Maybe that's an area where I'm just in a bubble.

ajmurmann• 5 years ago

I hear that later another amendment was pushed forward by sensors that perviously had voiced support for the Wyden amendment. This new amendment supposedly provided no solutions to done of the problems, but immediately found support from the White House as well and is rumored to have been pushed by the Treasury who doesn't like crypto.

zonethundery2• 5 years ago

It "felt like" some common ground between the wyden and portman (and its successor) amendments would be found. It was complicated by Senate procedural votes that made amendments much harder, and an overlying concern about CBO scoring of the budget impact of the bill. It can still be amended by unanimous consent (all 100 senators)but wyden or portman will have to blink and all the bill-haters will have to acquiesce.

EGreg8• 5 years ago

What makes you anti-crypto specifically?

Edit: see my sister comment for much more info

woodruffw8• 5 years ago

Not OP, but the absence of AML/KYC appears to be (very explicitly) one of their points against cryptocurrencies.

zarzavat3• 5 years ago

The entire point of cryptocurrency is precisely to enable bank-like services without bank-like obligations, to enable individuals to be their own bank and manage their own money if they want to.

You're right that it's unsurprising that the US Senate does not care about this problem. On the other hand, I'm pretty sure that the cryptocurrency world does not care about the US Senate. This will just end up being another "I promise I'm not a US person" checkbox when you sign up for cryptocurrency services.

cinquemb6• 5 years ago

This will just end up being another "I promise I'm not a US person" checkbox when you sign up for cryptocurrency services.

And that's only for centralized services… permissionless decentralized protocols with no articles of incorporation running on decentralized systems… this diktat is just the senate pissing in the wind…

Might as well be like clergy in the Ottoman Empire standing in the way of the printing press by saying it was a sin and it was invented by infidels…

JumpCrisscross4• 5 years ago

point of cryptocurrency is precisely to enable bank-like services without bank-like obligations

Crypto has shown some rules are unnecessary or even harmful. They should be repealed, across the board. In other cases, many cases, it's reinforced some rules' necessity. Their scope should be broadened. That's what's going on here.

If the sole value of cryptocurrencies is in evading the rules, it's going to have a tough time.

the cryptocurrency world does not care about the US Senate

Whether someone cares about the law isn't relevant to lawmaking or enforcement. (This attitude is also counterproductive. It leads to disengagement, which virtually guarantees more-onerous rules than would have been necessary.)

will just end up being another "I promise I'm not a US person" checkbox when you sign up for cryptocurrency services

This, alone, is insufficient. AML duties aren't discharged by an "I promise I'm not a money launderer or tax evader" checkbox.

jcranmer4• 5 years ago

The entire point of cryptocurrency is precisely to enable bank-like services without bank-like obligations, to enable individuals to be their own bank and manage their own money if they want to.

From what I understand of the actual cryptocurrency markets, very few people are actually interested in being their own bank. A lot of the cryptocurrency industry seems to be structured around providing bank-like services to cryptocurrency users.

gkfasdfasdf• 5 years ago

Since I had to Google it:

AML - Anti Money Laundering

KYC - Know Your Customer (i.e. ID verification)

knorker5• 5 years ago

KYC is not just ID verification. It's Know Your Customer, not "Know who you customer is". It goes deeper.

EGreg8• 5 years ago

What makes you anti-crypto specifically? To me, crypto means cryptography, that enables both digital signatures and encryption. Are you against end-to-end encryption as well, for the same reasons? Let me dive into the root issue head-on.

I understand you only had in mind cryptocurrencies, but there is a far wider issue at play here, that must be discussed substantively.

This is generally about removing the middleman (Big Finance) from transactions, just as, say, scuttlebutt and bittorrent removed the middleman (Big Tech) from communications.

Now, there are (at least) two aspects by which they can be removed. One is control: they can’t prevent you from publishing X or sending Y. This causes people to be free to publish potentially seditious material, or otherwise objectionable or illegal material (eg child pornogrophy, or copies violating copyright law).

The other is removing them from having to collect data and report. Without middlemen, the government has a harder time going after everyone. For example, having every maker of a desktop printer or copier report metadata on what was printed, is infeasible. BUT in the past, when printing machinery was expensive, you could control what was published and sanction those who didn’t have the “letters patent” authorizing the printing of a specific book or magazine. You could make sure to control what was distributed widely. With federated services like Mastodon or Matrix, the government can make a bill tomorrow to require them to report metadata on all speech they host, to make sure none of it is dangerous.

This reminds of the disastrous SOPA bill that HN was pretty much against, but it has the exact same concerns, just in the area of speech rather than financial transactions: https://en.m.wikipedia.org/wiki/Stop_Online_Piracy_Act

So today, if governments allow people to have “unhosted” wallets, there could be a lot of flaunting of capital controls (by sending $2 billion internationally very quickly) and tax evasion (by not reporting certain sales of houses for crypto, for instance). This would have implications for money laundering and funding unsavory groups etc.

At the same time, however, for small amounts, people want to be able to transact freely, such as buying a pizza with cash. This might become impossible to do given where governments are going: they have nearly eliminated anonymous cash transactions and will do so with crypto as well. When it comes to financial transactions, they will insist that everything will be “hosted” by a third party who can be punished if they allow certain transactions to happen. This is in preparstion for massive centralization of the monetary system in the hands of the central banks, you will have an account at the central bank which picks winners and losers, instead of “so-called” stablecoins which present competition to them.

The problem is that this elimination of petty cash can easily lead to a “social credit system” like we have in China, and gradual tightening of screws on any participant in the economy.

Thankfully, the US government has not taken the same approach with speech (probably due to the first amendment) and Big Tech platforms can be disrupted (eg with https://qbix.com/blog/2021/01/15/open-source-communities/)

The only exception the US makes is for copyright enforcement, and there, you can see much the same argument and attempts to ban people from being able to use end-to-end encryption to host files using BitTorret, say. The difference is, there are no “gateways” to the regular system so the battle was lost.

However, that is NOT true in other countries, which have less respect for freedom of speech. If we as a global community allow these governments to insist on NEVER replacing middlemen with technology, if we let them ban end-to-end encryption until anyone using it is suspicious in and of themselves,then they will ALWAYS have someone to squeeze to make sure the “wrong” types of transactions or speech is chilld - no matter how small - until it is eradicated.

To all the downvoters who hit the button literally 30 seconds after I posted: can you please maybe comment as to why?

woodruffw8• 5 years ago

What makes you anti-crypto specifically? To me, crypto means cryptography, that enables both digital signatures and encryption. Are you against end-to-end encryption as well, for the same reasons?

This is an unreasonable contortion of the OP’s comment. Conflating cryptocurrency (an industry rife with scams) to cryptography (a branch of discrete mathematics) belies precisely the reason people don’t take cryptocurrency boosters seriously.

kryogen1c• 5 years ago

If the answer is there should be no AML, KYC and/or reporting by cryptocurrency companies, we have no common ground on this argument.

this hits the nail on the head, imo. its the central argument. i dont think its as unambiguous as you say, though.

payment processors are _right now_ acting as extrajudicial legislators. many LEGAL business, like porn and weed, are restricted from operating on major payment networks.

this is assuming you and your government are on the same side. there are many places in the world where crypto is a boon to the oppressed.

not to detract from your point. crypto has a clear and direct path to cybercrime. just saying its not so clear.

mschuster91• 5 years ago

payment processors are _right now_ acting as extrajudicial legislators. many LEGAL business, like porn and weed, are restricted from operating on major payment networks.

The thing is, at least for weed companies, that they technically are not legal on federal level where banks are regulated. The Obama, Trxmp and Biden admins simply have chosen for now to ignore the issue on executive level since Congress is completely and utterly dysfunctional, which is something the next admin/President can easily turn over and prosecute everyone involved, even for actions years past.

For porn (as well as, where legal, sex work and gambling), the problem is the immense amount of fraud associated with it. Horny people caught by their s/o's or company expense teams stumbling on CC bills or plain old "post nut clarity" has led to many fraudulent "card has been stolen" chargebacks, as did actual fraud by people using stolen CCs to sign up for porn sites and resell these accounts on the Internet, and additionally to that there are lots of legitimate chargebacks (dark patterns in account signup aka pre-checked "recurring" options, low quality content). And add to that the various issues regarding legality of services rendered (which may be different depending on where the seller and/or the buyer are located and where the service takes place).

And if that wasn't enough, the US likes to enforce their laws on companies based in the US also abroad... which means even here in Europe where sex work, porn and (in sometimes utterly incomprehensible ways) gambling are legal in most our states, we still have the problem that the US companies export their morality codes onto us Europeans (see also: facebook's nipplegate).

The result is legitimate businesses and mixed-content businesses (reddit, onlyfans) being struck by obscene merchant fees or being denied service altogether since it's frankly infeasible for non-local services, especially in physical sex work, to be in compliance with the myriad of rules ranging from global international agreements against drug usage and human trafficking over federal and state law to county/town ordinances.

I agree that these businesses deserve access to banking (alone to reduce the incentive to rob them of their physical cash!), but seriously the solution to that is a reform of banking, sex work and gambling legislation - not cryptocoins.

starkd10• 5 years ago

But the power and potential disruption of cryptocurrency is the anonymity. It's the benefits of cash brought to the digital world. I understand the dangers of the criminal element, but underground economies benefit oppressed people when governments turn tyrannical. If you're response to that is only that "it can't happen here", I don't know what to say. They can and do happen faster than anyone realizes. And they are not quick to give power back.

rvz• 5 years ago

But the power and potential disruption of cryptocurrency is the anonymity.

Depends on the ones you use. Certainly the privacy coins like Monero are the ones that do better than most of the other coins out there.

JumpCrisscross4• 5 years ago

underground economies benefit oppressed people when governments turn tyrannical

They also benefit the rich and powerful by enabling tax evasion and graft. Pyongyang, Tehran and Caracas make regular use of illicit trade and money laundering to facilitate upward wealth transfer.

Yours is a legitimate point. It's an argument for curtailing the power of law and government. That's fine. We can debate that. But until America decides it doesn't want to collect taxes anymore, the reporting is sort of required.

dsr_• 5 years ago

If your argument is that governments should not regulate cryptocurrency because the point of cryptocurrency is to evade government regulation, you should expect cryptocurrency to become illegal rather than regulated.

JohnJamesRambo• 5 years ago

Almost every exchange I know of has mandatory KYC/AML now.

woah• 5 years ago

Your comment is completely unrelated to the matter at hand, and the article.

The controversy here is about this law potentially placing reporting obligations on software developers who never have any custody of client funds. Sort of like requiring the developers of Excel to report on users of Excel using it to manage their money.

I've also been struck by the proliferation of bank-like services without bank-like obligations. This stretches from fractional-reserve and maturity-transforming services like Tether to exchanges/dealers like Binance and ersatz money transmitters like BitPay.

All these centralized services that have some involvement with crypto already comply with a large number of regulations, and usually do much more stringent KYC than non-crypto payment processors do.

JumpCrisscross4• 5 years ago

reporting obligations on software developers who never have any custody of client funds

Custody doesn't haven an agreed-upon definition when it comes to crypto. That's the nut of the challenge. If we want reporting, someone who, in a traditional setting, would not have had to report, will when it comes to cryptocurrencies.

these centralized services that have some involvement with crypto already comply with a large number of regulations

Many do. Many don't. Tether and Binance are exemplars of pathological noncompliance.

hoops8• 5 years ago

I’m anti-crypto cause not enough people can understand how it works as a value store.

It’s fascist to peddle what is effectively magic as truth of reality when it’s just another man-made concept power brokers will (already have?), manipulate for their outsized gain.

Nation state money schemes are low tech and well known; they haven’t changed much. We don’t need to make a meta-value store to exchange for nation state currency, at great material expense. I’d propose the opposite; we stop treating people like concepts we must pressure to import our perspectives and preferences.

It’s unverified, but I’m pretty sure if we just made medicine, offered education, and built technology for those ends rather than moved at the drumbeat of elder rich to validate their once youthful existence, and pipe dreams none of us will live to verify came true, humanity would be in a much better place.

Talk about energy vampires; don’t focus on living a varied and full life! Focus on validating the rich! Focus on consuming what we can make the best margin on! Watch our ads so you never forget us!

And then once they’re empowered… my privacy! My freedom of speech!

Nice work.

nprz• 5 years ago

The bill expands the definition of broker to include anyone who facilities the transfer of crypto: miners, wallet providers, smart contract devs. These people are now made responsible for collecting transaction records for the IRS. That's just not how cryptocurrency works. Miners, smart contract devs, don't know who is transacting with who. It's effectively a ban on cryptocurrency.

zonethundery2• 5 years ago

You're not wrong, that is a maximalist interpretation of the language. Portman has tried to clarify, but there is always a gap between legislative intent and what the rulemaking process (i.e. Treasury) ends up doing with the statute. It's terrible language but not the end of the world (yet).

SpicyLemonZest3• 5 years ago

I don't want to sound unsympathetic, because the situation really does suck for cryptocurrency devs, but it's not obvious to me that they should get to unilaterally decide how it works. The bill defines a broker as "any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person", and it seems reasonable that anyone who's transferring assets on behalf of someone else should know who that someone else is.

More broadly, if you've ever wondered how industries can go to Congress with a straight face and argue for crazy regulatory exemptions, this is what it feels like from the other side. I like crypto devs a lot more than I like, say, Exxon, but I still don't think we should have carveouts just to protect their business model.

AnthonyMouse2• 5 years ago

If the answer is there should be no AML, KYC (edit: know-your-customer rules) and/or reporting by cryptocurrency companies, we have no common ground on this argument.

I still don't understand this. KYC has devolved into something unreasonable and it needs to be removed from the existing system, not extended.

When KYC was originally implemented, your bank was where you deposited your paycheck, paid your mortgage and withdrew some cash every few weeks for your expenses. If your bank knew who you were, they knew where you lived and where you worked. The first is a matter of public record and the second isn't exactly a big secret. Maybe you also had a car loan.

Today it has been extended to everything you buy on the internet or with a credit card, and people now buy everything on the internet and with credit cards. It ties your government identity to the books you read, the medical care you receive, genetic tests, what you eat, the establishments you patronize, your location history if you go anywhere and buy gas or anything else, who else was there at the same time, it's your whole life.

We need the ability to buy a copy of Das Kapital or a drink at a gay bar without being put on a List.

ryan_lane2• 5 years ago

Cryptocurrency doesn't help you buy a drink or a book. It does, however, help the rich avoid taxes and launder money.

danShumway2• 5 years ago

Blegh. I think that cryptocurrency was a well-intentioned experiment trying to solve real problems, but that it has broadly failed, and that some of the knock-on effects of speculation on top of the cryptocurrency ecosystem are just unambiguously harmful at this point.

It's not just the environmental concerns from PoW; I have concerns about privacy, about how coins have derailed (in my mind) more legitimate efforts to improve modern financial systems. And I have cultural concerns about how this plays into some of the worst instincts of modern society towards speculation and artificial scarcity purely for their own sake, disconnected from any problems or utility. NFTs are the type of technology that honestly shouldn't have been developed, they're pointless and exploitative.

But as much as I do kind of want cryptocurrency to crash and die, I really don't want to do it this way. I've seen some people argue that this wouldn't apply to software developers, but I don't like that the question is under debate at all. The idea that it theoretically might is terrifying, if it's not intended to apply to developers why wouldn't we clarify that in the bill to assuage those fears? And even where miners are concerned: I would like to see mining (particularly PoW mining) eventually become unprofitable, but pushing those people into the category of brokers seems really problematic and short-sighted.

My worry is both that this will open the door to a lot more unnecessary data collection, and that further down the road it might hinder efforts to make better alternatives to the current cryptocurrency industry. The financial concerns are real, but the really troubling part to me is the reporting requirement. Software developers shouldn't be collecting this kind of information, neither should miners.

I also haven't seen a lot of consensus about what technologies the label "digital asset" could apply to in the future, and that worries me a lot as well. I am not a legal expert, I don't feel qualified at all to speculate on how this stuff is determined. A smaller group of people saying that "obviously X made-up digital token or point system or game item wouldn't count" -- that's not super-reassuring to me because I'm not smart enough to evaluate the accuracy of their claims. I want to see more qualified legal experts weigh in. I don't want to see games suddenly collecting a lot of personal information just because technically someone could sell a digital item to another player for money.

I like Wyden's amendment: it still goes after brokers, but it makes it clear who a broker is (and importantly, isn't). And I thought that there was pretty decent bipartisan support for Wyden's amendment. It's really frustrating that support seemed to only be good enough to get 29 votes.

analog31• 5 years ago

>>> I think that cryptocurrency was a well-intentioned experiment trying to solve real problems...

I'm not so optimistic. I've seen too many technological experiments unleashed on humanity, such as Facebook, to where I am much more skeptical about the original intentions of their inventors.

EGreg8• 5 years ago

Oh my goodness. Here is Portman himself in his own words:

“The Treasury Department, the nonpartisan Congressional Joint Committee on Taxation and others believe that the current language is clear and that the reporting requirements only covers brokers, but my view is that we should work to clarify this given the potential for confusion on an extremely important issue. In particular, we want to be sure miners and stakers and others now or in the future who play a key role by validating transactions, or sellers of hardware or software for digital wallets, or node operators, or others who are not brokers are clearly exempted.”

Video: https://youtu.be/p0auPbbDQnY

AND YET the Warner-Portman-Sinema (note the Portman in there!) amendment doesn’t specifically exclude stakers or validators who may now or in the future secure the networks, and certainly not the catch-all “others who are not brokers”? Only exempts proof-of-work miners? Yet he claims it was already “clearly exempted” in the proposed bill at the time of his speech and the amendment was supposed to clarify that??

I wonder if the Senator’s own words on the floor, and assurances that the Treasury and others hold the same view, could be used in court cases to clarify the meaning of “broker” later on, in favor of the defendants (Ethereum proof of stake miners, say) when they will invariably be served papers and prosecuted for not reporting.

Seriously, how can you say one thing and do another so blatantly? This is worse than “if you like your plan you can keep it”.

Will the Treasury and others likewise say one thing in private (as he reports) and quickly flip when it comes to making examples out of non-reporting POS miners?

lauangelcu192• 5 years ago

The only winner? Senate

lauangelcu192• 5 years ago

The only winner? Senate.

alksjdalkj2• 5 years ago

I don't really follow any cryptocurrency news but wasn't one of the main appeals early on that it would be independent from any governments? Specifically that it could be a currency not subject to the oversight and sanctions of the US treasury? I guess "cryptocurrency" is different from "cryptocurrency industry", but it still seems like the ecosystem as a whole should be more resilient to actions from the US government. Otherwise what's the point?

frankbreetz3• 5 years ago

Governments can't control it in a sense that they can't create more of it and can't sensor transactions(sanctions) .

If you think of it as the same idea of gold, the government can't make more it. They can limit transactions to a degree, but they can't really stop one person from handing another person a suitcase full of gold. They can make laws around it, but they will not necessarily be enforced. There is of course oversight over gold, but the government doesn't have as much control as fiat. Namely they can't make an infinite amount just by passing a bill.

The government can make as many laws as they want, whether they are enforced or not is another matter.

onepointsixC2• 5 years ago

Governments can control it. In the end of the day, sure they can't control that gold, but moving gold itself is a problem. You can't go to a dealership to buy something with your gold suitcase. In order to do anything useful with that stored wealth you need to convert it to cash and that's where they get you. That's how they control it.

dcolkitt7• 5 years ago

Cryptocurrency is extremely resilient to government action. Regardless of what happens with this legislation, I can virtually guarantee you that crypto will still exist in a decade. Obviously the market agrees, as the major coins and tokens have reached 3 month highs while this legislation was unfolding.

The reason I oppose hamfisted laws in crypto is the same reason I oppose the War on Drugs. Is the government even remotely competent to eliminate illicit drugs or even reduce the supply of illicit drugs? Not even close. But is the government capable of finding a few poor bastards and ruin their lives to make publicity stunts? Absolutely.

Just like with drug laws, the primary victims are going to be the disadvantaged and disconnected. Just like with drugs, the elites will be able to insulate themselves from the rules. Two out of three of our past presidents suffered no consequences from their admitted illicit drug use, while millions of poor minorities were locked up.

I’m a professional crypto dev, and I’m not sweating this at all. Our venture funded startup can easily afford high powered lawyers to make sure we’re compliant. Now what about the 17 year old hacker who quickly uploads a smart contract that he thinks does something cool, and all of a sudden is looking at two decades in federal prison because Elizabeth Warren wants to nail a sacrificial “shadowy super coder” to the wall.

frankbreetz3• 5 years ago

Drug laws caused the average person to be terrified of drugs. If the average person becomes as scared of crypto as they are of drugs, crypto may exist, it won't be a mainstream product.

There are no vc funded cocaine or heroine companies.

alksjdalkj2• 5 years ago

If you need to hire high powered lawyers to be able to use crypto, isn't that demonstrating that crypto has failed to be a universal, government-independent currency? Or am I misunderstanding something and that was never the point?

knorker5• 5 years ago

wasn't one of the main appeals early on that it would be independent from any governments?

The government has the guns[1]. And a structured (albeit imperfect) way of having the people's voice be heard. It could never be independent in the way that coiners dream.

To a rounding error nobody wants the government not to be able to control the money.

Child support, theft, jury-awarded penalties, etc… etc…

People actually do want a judicial system. Is that controversial now?

[1] And don't give me 2nd amendment. This is what Biden meant when he said that the USG has nukes. It's not a threat, but a statement of fact that the people cannot outgun the armed forces. The USD is ulmitately backed by the nuclear triad, with many layers before that.

frankbreetz3• 5 years ago

Strangely, crypto has gone up in spite of this news. This seems worse then China banning mining, which caused a pretty significant drop earlier this year.

Why would this not effect the market in a similar fashion. As far as I understand it, this effectively bans crypto mining in the US. Am I missing something?

csomar• 5 years ago

If you think the crypto-market moves on news, then you have missed on some sweet gains. The news effect is getting reduced since every single time it proves that it doesn't matter.

Bitcoin price is lead mainly by retail demand. Speculators are quick to panic on the way down, but the return of retail demand end up in a new bubble. This is mostly the byproduct of lack of faith on the foundations of the price. These effects are less felt now that the market has matured.

Of course this is purely my opinion and observation. So take that with a bag of salt.

cblconfederate2• 5 years ago

Rush to buy before regulatiob kicks in? I mean the whole crypto rallies until now were not because of government help . Until recently banks would close your account if you bought cryptos

davidcbc2• 5 years ago

Because whenever there is bad news for cryptocurrency Tether prints a billion dollars worth of coins out of thin air to artificially inflate the price of BTC

jondwillis• 5 years ago

I am no fan of the ongoing Tether fraud and share this view, however, instead of cynically declaring this to be the case, it'd be nice to see evidence of that occurring right now.

tfehring2• 5 years ago

I guess I don’t understand what the amendment actually does. If you’re a crypto miner, you already have to report your own income from that activity to the government; failure to do so is already a crime, namely tax evasion. And if you’re not a custodian, by definition your own activity is the only activity that you have data on, right? What new reporting does this actually mandate?

flyingfences• 5 years ago

This mandates miners (and developers, and others who are not custodians) reporting data on others that they do not and cannot have.

tfehring2• 5 years ago

Right, that's what the article says, but what specific data would they be required to report and in what context?

fridif• 5 years ago

If they kill crypto, we will always still have barter.

If they kill barter, then we've got serious problems.

Finnucane• 5 years ago

Hey, the crypto industry has Ted Cruz in its corner, so that's, uh, okay, well, never mind.

onepointsixC2• 5 years ago

As someone who has been sorely disappointed by much of how crypto has developed since it's early days and is somewhat a crypto pessimist, I'm extremely disturbed that something which could outright kill US Crypto is being rammed into a infrastructure spending bill. If you want to ban crypto, fine, that's a position which could be taken, debated, and discussed. But it should be done separately and given sufficient time for public feedback. Stuffing it into this bill is asinine to the nth degree.

starkd10• 5 years ago

Maybe because they know it is unpopular and they can't buy off senators who will only vote for it because it contains unrelated provisions they want?

pionar• 5 years ago

It's not being "stuffed" into a bill, it's an amendment that had voting on it. There was a competing amendment that didn't get the support this one did.

Texaner• 5 years ago

Come on... He's not complaining about lack of voting. Obviously everyone is abiding by formal procedures. The problem is when congress passes bills under one name while it contains a myriad of unrelated legislation. This is bad for public transparency.

nybble41• 5 years ago

It's the infrastructure bill itself that contains the poorly considered provisions which (arguably) require miners and unhosted wallet developers to collect and report transaction information to the IRS. The competing proposed amendments to mitigate this have yet to be subjected to a vote.

knorker5• 5 years ago

No it's fine. It's just the cryptocurrency/smart contract industry.

Crypto will be just fine.

specialist• 5 years ago

Just to be clear, "crypto" is short for cryptocurrencies?

This legislation does or does not impact other cryptography use cases?

My concern comes from government's long standing opposition to personal cryptography. eg Clipper chip in phones.

echopurity• 5 years ago

Many people start coding at a young age. Imagine your kid having to report their dapp to the IRS. It's not about the money. It's about the control.

The situation is probably worse for adults. Why go through the hassle of developing dapps when it means dealing with the IRS and potentially jail, etc.? Personally I've abandoned working on completely harmless dapps because of threats from the state. It's stifling for independent development.

On the other hand, when people compare this to China banning mining, I think the USA is far friendlier to crypto than China, because, as the ascending fiat superpower, China has much more to lose. As the dollar continues to devalue, the USA would most likely prefer a future based on Ethereum rather than the Yuan.

gizmo686• 5 years ago

Many people start wood working at a young age. If they want to build a house, they need to acuire permits, comply with zoning regulation, comply with building codes, get sign off from a certified engineer.

Not all coding is the same. If you want to work to code in a regulated industry, you need to play by the regulations. Finance is a regulated industry, not a sandbox.

armatav• 5 years ago

Yeah but at the same time if you mint a few beautifully patterned - 300 hours-of-work each - wood coins and trade them; it’s not finance and it’s unregulated.

trident5000• 5 years ago

Doesnt go into effect until 2023. Theres going to be time for them to tweak this.

creese• 5 years ago

They've updated the title. The title now reads: "U.S. Senate Bill Threatening Crypto Industry Moves Forward"

tablespoon• 5 years ago

Bitcoin crypto is the future of secure IPO communications.

U.S. Senate Vote in Favor of Amendment That Threatens Crypto Industry

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