Let's be clear: Blockchain technology is an infrastructure

In recent weeks, the blockchain industry has made headlines as it engages in intense talks with lawmakers after $ 28 billion investment c...



In recent weeks, the blockchain industry has made headlines as it engages in intense talks with lawmakers after $ 28 billion investment cryptographic tax declaration proposal unexpectedly became part of the Biparty Infrastructure Agreement (BID). Ultimately, the BID language remained unchanged, leaving uncertainty for businesses that rely on blockchain, especially those dedicated to its value beyond cryptocurrency trading. Although they failed in their attempt to change the language, many claim victory over the industry which finds its voice in the negotiations. Now he needs to use that voice to refocus the conversation on what really matters – the fact that blockchain technology is infrastructure, not just a revenue stream to fund it.

Related: Biden’s infrastructure bill doesn’t undermine crypto’s bridge to the future

Infrastructure in the form of roads, railways, broadband, and an energy grid is all about building foundations and connectivity for American businesses to grow and prosper. Look no further than the companies that power e-commerce and deliver goods to the doorsteps of Americans in every corner of the country. Their success depends on our infrastructure, from electricity to the Internet to airports and highways. Their profits are taxed and used, at least in part, to support this underlying infrastructure.

In the context of the blockchain, cryptocurrency trading is just one of the many uses of the technology – and, as its inclusion in the BID points out, one that can generate significant taxable income. But, the technology itself, much like our road and rail systems, is an infrastructure that creates opportunities for increased efficiency and connectivity to solve pressing real-world problems. Already, blockchain creates better access financial services, faster and cheaper cross-border payments and greater interoperability of international banking systems, promoting economic opportunities and financial inclusion in the United States and around the world.

Related: Adoption of Stablecoin and the future of financial inclusion

Remittances to low- and middle-income countries reached $ 540 billion in 2020, according to the latest report of the Global Knowledge Partnership on Migration and Development. However, individual senders incur inordinate fees when transferring money across borders using traditional payment infrastructure. In Q4 2020, the global average cost of sending $ 200 was 6.5%. Blockchain improves the remittance landscape by dramatically reducing fees, transaction times, and the friction associated with an abundance of middlemen. Blockchain-powered payments can take seconds instead of days, and transaction fees can be negligible – as low as fractions of a cent.

Blockchain has attracted innovators with immense talent who use this technology to create products and solutions at high speed, much like in the early days of the internet. The possibilities are limitless, but only if technologists are allowed to continue to build, improve and innovate. It is the software and protocol developers, validators and miners who make the technology work. The vague language of the BID could drag these technologists into the definition of “broker” and the resulting reporting requirements. By failing to distinguish between builders of blockchain – the infrastructure – and a single specific use of this technology – brokerage transactions – the BID risks undermining progress in this burgeoning industry.

Related: Broker licenses for U.S. blockchain developers threaten jobs and diversity

Blockchain infrastructure providers, faced with the possibility of declaring requirements for data they simply don’t have, will be forced to operate in an increasingly uncertain regulatory environment that will, at best, slow their efforts. (and the practical use cases they allow) and, at worst, drive them off. Without blockchain infrastructure, the country would not only lose tax revenue from cryptocurrency trading, but also the benefit of many other solutions being built.

Understanding the ramifications of this language, the industry has come together and reacted forcefully – not to block legitimate taxation of cryptocurrency trading or reporting requirements, but to educate lawmakers. Experts must continue to speak up and explain the blockchain, its use cases and the roles of the different actors. Only then can lawmakers craft legislation that balances the need for regulation with the need to encourage innovation to continue to thrive in the United States.

The industry is optimistic after hearing from knowledgeable senators who have championed amendments distinguishing between tech builders and financial service providers. With continued dialogue between the industry and the US Congress, there is still hope that this legislation will reach a place that promotes tax compliance for appropriate blockchain users while allowing innovation in a wider space. As the BID moves through the US House of Representatives, the job is far from over. The industry stands ready to continue helping lawmakers craft informed legislation and looks to policymakers to foster, not hinder, advancements in technology and infrastructure like blockchain that are the backbone of success and success. America’s economic growth.

The views, thoughts and opinions expressed here are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Denelle Dixon is the CEO and Executive Director of the Stellar Development Foundation, a nonprofit organization that supports the development and growth of Stellar, an open source blockchain network that connects the global financial infrastructure. Previously, she was COO of Mozilla and also served as legal counsel and private equity and technology counsel.