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CoinDesk Podcast Network
UNCHAINED: Could the Bank Secrecy Act Harm Crypto? Coin Center Thinks So
Nov 17, 2023
Peter Van Valkenburgh, director of research at Coin Center, discusses the potential harm the Bank Secrecy Act could cause to crypto developers. He also explores the IRS's proposed broker rule for tax reporting in crypto, the constitutionality of the rule, and alternative approaches for effective regulation. The podcast also covers topics such as DeFi taxes, balancing law enforcement with constitutional rights, and recent crypto news and events.
38:51
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Quick takeaways
- The proposed IRS broker rule for tax reporting in the crypto industry could be unconstitutional, infringing upon First Amendment rights and Fourth Amendment protections against unreasonable searches and seizures of private information.
- Coin Center's research paper questions the constitutionality of the Bank Secrecy Act, arguing that the delegation of legislative authority to the Secretary of Treasury raises constitutional issues, potentially infringing upon First Amendment and Fourth Amendment rights of individuals.
Deep dives
IRS Proposed Broker Rule and Concerns in the Crypto Community
The IRS has proposed a new broker rule for tax reporting in the crypto space, defining who qualifies as a broker for third-party tax reporting purposes. This rule has generated significant attention and concern within the crypto community. Previously, there had been a fight over the definition of a broker, which included non-custodial and decentralized exchanges. However, the new rule expands the definition even further, encompassing software developers who publish code on the Ethereum blockchain and have the ability to change smart contract fees. Some argue that this new definition is unconstitutional from a First Amendment perspective as it amounts to compelled speech, and it also raises concerns about Fourth Amendment protections against unreasonable searches and seizures of private information. Coin Center, a research organization, has submitted a comment letter to the IRS outlining these constitutional concerns. Overall, the proposed broker rule has significant implications for reporting requirements and civil liberties within the crypto industry.
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