Could the Bank Secrecy Act Harm Crypto? Coin Center Thinks So

In this episode of Unchained, Peter Van Valkenburgh, director of research at Coin Center, explains why the IRS’s proposed broker rule for tax reporting in crypto could harm the crypto industry as well as the security and privacy of users. He explains how Coin Center thinks the IRS should accomplish its aims, and why that would even work for collecting taxes on DeFi gains.

Additionally, Peter explains why he believes the Bank Secrecy Act might be unconstitutional and how that could potentially affect developers building in crypto.

Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform.

Show highlights:

• What the IRS’s proposed broker rule entails for crypto tax reporting and why this could  have a negative impact on the industry
• What responsibilities brokers in the crypto space now face
• Why the IRS didn’t use Congress’s amended language from the infrastructure bill
• Why Peter argues that the IRS’s new proposed broker rule on crypto is unconstitutional and the principles at stake
• The alternative approaches Peter suggests the IRS could adopt for more effective and fair regulation
• Why Peter has concerns for crypto developers about the potential application of the Bank Secrecy Act
• What actions Coin Center is undertaking to advocate for changes in the Bank Secrecy Act to better align with crypto realities
• Why Coin Center is appealing in its lawsuit against the Treasury Department over the OFAC sanctions on Tornado Cash

Thank you to our sponsors!

• Arbitrum Foundation

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Guest

• Peter Van Valkenburgh, director of research at Coin Center
  • Previous appearances on Unchained:
    • Why the SEC Is Probing Yuga Labs and Coin Center Is Suing Treasury
    • How Coin Center Is Helping Define The ‘Big Fuzzy Gray Area’ Of Blockchain And Cryptocurrency Law
    • Why the SEC’s Proposed Rules Affecting DeFi Could Violate the First Amendment

Links

IRS Crypto Regulation

• Coin Center: Electronic Cash, Decentralized Exchange, and the Constitution
• The Blockchain Association’s letter opposing tax regulations proposed by the IRS
• CoinDesk: How the Crypto Industry Responded to the IRS Proposed Broker Rule
• Patriot Act 
• California Bankers Assn. v. Shultz

Bank Secrecy Act

• Coin Center:
  • Broad, Ambiguous, or Delegated: Constitutional Infirmities of the Bank Secrecy Act

Tornado Cash

• • Coin Center:
    • U.S. Treasury sanction of privacy tools places sweeping restrictions on all Americans
    • Coin Center is suing OFAC over its Tornado Cash sanction

• Denial of Coin Center’s motion in its case against the US Treasury over OFAC sanctions