In recent weeks, the blockchain industry has had heated discussions with legislators after 28 billion U.S. dollars, and it has made headlines. Encrypted tax report proposal Accidentally became part of the Bipartisan Infrastructure Transaction (BID). In the end, the BID language has not changed, which leaves uncertainty for companies built on the blockchain, especially those that are committed to exceeding the value of cryptocurrency transactions. Although their efforts to modify the language were unsuccessful, many people claimed to have won the industry and found their voice in the negotiations. Now, it needs to use this voice to refocus the conversation on what is really important-in fact, blockchain technology is infrastructure, not just a source of income for funding it.
Infrastructure such as roads, railroads, broadband, and energy grids are designed to lay the foundation and connectivity for the development and prosperity of American companies. Look at the companies that promote e-commerce and deliver goods to the doorsteps of Americans in every corner of the United States. Their success depends on our infrastructure, from electricity and internet to airports and highways. At least part of their profits are taxed and used to support the underlying infrastructure.
In the context of blockchain, cryptocurrency transactions are only one of the many uses of the technology-and, as its inclusion in the BID emphasizes, a use that may generate large amounts of taxable income. But technology itself, like our road and rail systems, is infrastructure that can create opportunities for efficiency and connectivity to solve pressing real-world problems. Already, Blockchain is creating better access To financial services, Faster and cheaper Cross-border payments, and greater interoperability in the international banking system—promoting economic opportunity and financial inclusion in the United States and around the world.
The latest data shows that remittances to low- and middle-income countries will reach US$540 billion in 2020. Report From the global migration and development knowledge partnership. However, when using traditional payment infrastructure to transfer money across borders, individual senders incur huge fees. In the fourth quarter of 2020, the average cost of sending $200 globally was 6.5%. Blockchain improves the remittance landscape by significantly reducing the costs, transaction time and friction associated with a large number of intermediaries. Blockchain-driven payments can take seconds instead of days, and transaction fees can be negligible-as low as a fraction of a cent.
Blockchain attracts talented innovators who are using this technology to build products and solutions at extremely fast speeds, just like the early days of the Internet. The possibilities are limitless, but the premise is to allow technicians to continue to build, improve and innovate. They are software and protocol developers, verifiers, and miners who make technology work. The vague language of BID may include these technicians in the definition of “broker” and subsequent reporting requirements. By not distinguishing between the builder of the blockchain-infrastructure-and a specific use of the technology-brokerage transactions-BID may disrupt the progress of this emerging industry.
Blockchain infrastructure providers face the possibility that they may need to report data they don’t have at all, and they will be forced to operate in an increasingly uncertain regulatory environment, which at best will only slow down their efforts (and what they enable Actual use cases) and, in the worst case, drive them to sea. Without blockchain infrastructure, the country will not only miss the tax revenue from cryptocurrency transactions, but also the benefits of more solutions currently being built.
After understanding the consequences of this language, the industry came together and responded forcefully-not to hinder the legal taxation of cryptocurrency transactions or reporting requirements, but to educate lawmakers. Experts must continue to speak up and explain blockchain, its use cases, and the roles of different actors. Only in this way can legislators enact legislation that strikes a balance between the need for regulation and the need to encourage innovation to continue to thrive in the United States.
After hearing well-informed senators support the amendment to distinguish between technology builders and financial service providers, the industry is optimistic. With the ongoing dialogue between the industry and the U.S. Congress, there is still hope that this legislation will promote tax compliance by appropriate users of the blockchain while allowing innovation in a wider space. With the submission of BID to the US House of Representatives, the work is far from over. The industry stands ready to continue to help legislators make smart legislation, and expects policymakers to promote rather than hinder technological progress and infrastructure such as blockchain, which constitute the pillars of American success and economic growth.
The views, thoughts, and opinions expressed here are only those of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Danielle Dixon He is the CEO and Executive Director of the Stellar Development Foundation, a non-profit organization that supports the development and growth of Stellar. Stellar is an open source blockchain network that connects the world’s financial infrastructure. Prior to this, she was the chief operating officer of Mozilla and also served as general counsel and legal counsel in the private equity and technology fields.