New regulation could cause a split in the crypto community

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Big Crypto has arrived. On August 10, after days of wrangling and angry tweets, cryptocurrency enthusiasts, advocates and entrepreneurs watched in horror as the US Senate approved a $ 1,000 billion infrastructure bill, accompanied by ‘an article that many fear will put the entire U.S. crypto industry at risk irreparably. The controversial rule would require brokers to deal in digital assets, ie. Cryptocurrencies report their customers to the Internal Revenue Service so they can be taxed.

The crypto crowd complained that Bills’ definition of broker was so broad to potentially encompass miners, validators, and decentralized application developers who, while playing a central role in the functioning of a blockchain ecosystem, did not have no way of identifying their anonymous users.

Initially, it seemed that the wording of the bill could be changed to exempt these categories, as a trio of senators introduced an amendment clarifying the term broker. Then another amendment, backed by the White House, appeared, pushing for a less lenient clarification, exempting miners from proof of work who use a power-intensive process to secure blockchains such as Bitcoin or Ethereum, but not many other categories, such as as proof of – stake validators, which perform the same function without burning energy. While a compromise position was being worked out, the Senate decided to pass the bill without amendment. Any changes will have to be made at a later stage and they will probably be, given the manifest inapplicability of the bill as it stands.

At first glance, it’s a beating for American crypto. But the story that has been circulating is quite different: the infrastructure bill is a turning point in the history of cryptocurrency. The technology behind a crypto-anarchist, anti-banking, borderline anti-government manifesto disguised as a code has finally acquired this great marker of prestige: a lobby. The fact that some senators were ready to fight the crypto wedge seems to show that the cryptocurrency industry is more than a bunch of Twitter accounts and some venture capitalists. Whatever the reason, he has influence, and after the infrastructure bill he will be ready to wield it even more skillfully.

We are seeing the formalization, maturation, of the crypto lobby, and this was the first coordinated effort that carried that out, said Alex Brammer, vice president of business development at Luxor Tech, a bitcoin mining company. Organizations like the Blockchain Association, the Texas Blockchain Council, or the Digital Chamber of Commerce will certainly continue their work.

Cryptocurrency is generally, and lazily, described as the Wild West, but in fact, established companies operating in the industry, from large mining companies to Wall Street listed giants such as Coinbase, tend to seek regulation to define. the limits of what is acceptable and what could get them into trouble. Sophisticated players in this space welcome smart regulation – it provides clarity and predictability for large operations, says Brammer. It provides a set of rules of conduct that allows large publicly traded companies to ensure that they are doing everything possible to be as viable and profitable as possible in the future.

But where does that leave the smaller, less established and less corporate players? The Bitcoinan asset owned and trusted by billionaires such as Mark Cuban and Elon Muskhas has been growing since 2009 in an industry that carries the weight and recognition of the brand. (Even Ted Cruz is lyrical about it).

The much-contested White House-approved amendment reportedly saved bitcoin while throwing much of the crypto under the bus. Certainly, when this plan emerged, the crypto-lobby or, at least, crypto-Twitter rose up against it. Jerry Brito, executive director of cryptocurrency trading group Coin Center, thundered against the Senate’s attempt to pick winners and losers, while venture capitalist and crypto-ideologue Balaji Srinivasan claimed the amendment would end. by opening the door to a total ban on bitcoin. But it’s worth considering whether, in the long run, a rift might open between a Big Crypto calling for clear regulation to achieve peace of mind, and the smaller players in the cryptocurrency community, who could be less well equipped to meet the requirements that regulations would impose.

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