U.S. bitcoin industry could be in check after new congressional decision

Update 08/26/21: This article was amended after publication to add data about Bitcoin’s hash rate in the United States.

The U.S. Congress on August 24 blocked the possibility of the so-called infrastructure bill from having amendments. The legislative proposal will not be amended before its vote in the House of Representatives. That is, all guidelines for the Bitcoin industry to pay more taxes and “Know Your Customer” (KYC) protocols to be applied at all levels would be approved.

The initiative already had the go-ahead from the Senate which validated it two weeks ago, a fact reported by CryptoNews. Now the House Rules Committee agreed that the draft accepted by the senators will have no changes. If the bill is passed in Congress, it will then go to the White House to be signed by President Joe Biden.

The infrastructure bill is a mechanism through which the U.S. government seeks ways to finance its federal spending. This includes, for example, building roads, bridges or improving broadband Internet access. The bipartisan bill calls for spending $1.2 trillion over the next five years.

One of the ways lawmakers are proposing to raise the funds is to increase tax collection in the Bitcoin ecosystem. The congressmen believe that the sector could contribute about $28 billion by redefining the figure of the broker or broker. This category would include all those entities that participate or facilitate transactions on blockchains.

More taxes on Bitcoin and more KYC

The concept looks very broad and would not only include centralized exchanges, for example. Decentralized exchanges, miners, node operators and even wallet developers would also be covered. All of these participants would have to report their gross income to the Internal Revenue Service (IRS) for facilitating operations.

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What looks even more complicated is that these entities must identify the parties involved in the transactions. In other words, the miners would have to capture the personal data of the users who use their services as they act as “brokers” between two parties who need to transfer funds.

KYC protocols are already part of a large number of <a href=”https://www.criptonoticias.com/criptopedia/exchanges-bitcoin-casas-cambio-trading-compraventa-criptomonedas/” tar

get=”_blank” rel=”noopener”>exchanges, which has partially reassured other legislators around the world. However, talking about KYC in decentralized exchanges

or Bitcoin mining does not fit with the proper functioning of the technology.

On this last point, the graph below shows the position of the United States within the global distribution of hash rate of the Bitcoin network. The North American nation is in second place with 16%, only behind China, which already has 46%.

U.S. bitcoin industry could be in check after new congressional decision U.S. bitcoin industry could be in check after new congressional decision United States is positioned as the second country with the second largest processing power in the Bitcoin network. Source: cbeci.org.

With the blocking of the possible amendments last Tuesday, the possibility of adjusting this proposal was discarded, which would harm the Bitcoin industry and cryptocurrencies in general. If applied, mining companies or developers could migrate to other latitudes with legislation that favors development rather than restrict it.

The vote to approve or not the infrastructure law would take place before September 27. The congressional decision comes at a time when the United States is looking to become a major global hub for cryptocurrency miners. In fact, multiple mining companies have already begun expanding their facilities, while others are migrating from China.

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