Quick thread on ANOTHER bill the GOP is bringing to the floor this week. Specifically, to repeal the DeFi Broker Rule that the IRS issued under the last administration. The ONLY reason to support this bill is to facilitate tax evasion and money laundering.
1. A bit of jargon first. This is a bill under the Congressional Review Act (CRA). If it passes, it would not only repeal the rule but prevent this or future White House from offering substantially similar rules.
2. “DeFi” is decentralized finance. Don’t get intimidated by the words. Just think about it as the website or the app that lets you buy and sell crypto.
3. The rule they want to repeal says regulates DeFi providers since that’s where you access the system. Just as your brokerage account is responsible for knowing who you are, sending tax info, ensuring you’re not a money launderer… DeFi is that for digital assets
4. By making clear they are the point of control, the IRS rule would ensure that is the point of compliance to spot and stop bad actors. And the place where you would have to report any tax gains or losses. The Republicans want to make that *PERMANENTLY* impossible.
5. If that rule is revoked, we lose all control, because of the way that the crypto industry has set up their technology.
6. Because the argument that blockchain technology makes every transaction traceable is - in a word - bullshit.
7. That’s not because a single blockchain isn’t traceable. It’s because the industry has created hordes of backdoor ways to stymie that accounting control. You can set up bogus accounts with anonymous wallets so now one can identify an intermediary.
8. You can “hop” between chains with two different currencies, essentially killing the breadcrumb trail.
9. You can use so-called “mixers” that allow you to throw your crypto in a bucket with lots of other people’s crypto, scramble it all and then give you an equivalent mixed, totally anonymized equivalent amount of money out of the back end.
10. All of that means that if your goal is to evade taxes, traffic children, fund the North Korean nuclear program, evade Russian sanctions, flood your community with fentanyl… the broader ecology of the crypto network makes that really easy.
11. What the IRS sought to do with their rule is make sure that at the point of entry into that system, you have to identify who you are and report your transactions for tax and other legal purposes. Whose interest is served by repealing that rule?
12. Anyway, this is the kind of vote that might get swept under the rug and ignored. But it is REALLY bad, with massively negative consequences. I’m voting hell no. And extremely suspicious of anyone who doesn’t. /fin
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