Some commentators describe him as “eccentric”. Others “panic”.
Whatever you call it, after a short break over the weekend – which saw Bitcoin (CRYPTO: BTC) For example, prices surged above $42,000 for the first time in months – cryptocurrency crashes again on Monday.
Here’s how prices stand as of 9:45AM ET for many of the biggest names in the cryptocurrency space:
- Dogecoin (CRYPTO: DOGE) It’s down 2.6% in the past 24 hours.
- XRP (CRYPTO: XRP)RippleNet, the cryptocurrency, is down 1%.
- A pioneer in the crypto industry Bitcoin (CRYPTO: BTC) It is the worst ever – down 4.6%.
Ethereum (CRYPTO: ETH), at least, it’s still in positive territory for now – up 0.6%. But it is almost a green and lonely island in a red sea. So what made cryptocurrency investors nervous this morning?
It’s Congress – and how the US Congress ends up defining the word “mediator”.
Last week, cryptocurrency traders faced a small panic on Friday after reports emerged that the International Monetary Fund had described cryptocurrency investments as “extremely volatile,” poor places to “store value” — and unsuitable for use as national currencies. So far, only tiny El Salvador has taken the step of actually doing so, though. Even more pressing for crypto investors is a new 2,700-page US infrastructure bill that could get a Senate vote “within days,” according to Senate Majority Leader Chuck Schumer).
Buried within this nearly $1 trillion bill is a requirement to help pay for American infrastructure by taxing cryptocurrency profits to the tune of $28 billion. As CoinDesk reported today, the main concern here is not taxes per se (which are already part of the US tax code), but rather an expanded provision that requires crypto “brokers” to report their crypto income to the IRS.
Here’s why this is a problem – and why Forbes A magazine, for example, today thought that it could “kill” the cryptocurrency industry: By law, as it is currently written (still subject to amendment), “any intermediary that transfers any digital assets will need to file a return” with the IRS describing that Transfers. According to CoinDesk, this rule appears to be aimed primarily at cryptocurrency exchanges, but the definition of “intermediary” “does not explicitly exclude miners, node operators, software developers, or similar parties.” Nor does it exclude decentralized cryptocurrency exchanges, as there is no single operator that clearly bears the reporting obligation.
Cipher lawyer Jake Chervinsky quoted in language Forbes Concern that this requirement “defies logic,” and “literally impossible” to comply with – “unless the goal is to kill the industry” by imposing “a virtual ban on [crypto] Mining in the United States.
So what does all this mean for cryptocurrency investors? Essentially, it introduces new ambiguity and uncertainty about what exactly Congress is trying to do here (aside from just raising taxes). And as we all know, the stock market absolutely hates uncertainty. Until Congress does its duck in a row and clearly defines the “brokers” who want to report to the IRS, investors in this market should control more volatility.
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