I fail to see how this is a "privacy disaster." It looks like crypto brokers are going to be treated like all other brokerages.

Do you also call it a "privacy disaster" when your bank account requires your name and address so they can report interest payments to the government? Or when Robinhood/Schwab/Vanguard/Etc send the IRS a list of all your stock transactions for the year in a form 1099?

Bitcoin is basically digital gold, and just like with gold, when you chose to buy or sell it the convenient way (eg. through an ETF instead of actual physical gold), it gets reported to everybody.

You can always custody your own bitcoin and find partners to transact with directly and choose not to report it (like with physical gold), but, similar to physical gold, it will be extremely cumbersome, risky, and not worth your time to do so.

Sure, if you bend over backwards and squint through one eye, you can contort yourself into the bad faith interpretation that developers will be treated as brokers--given they can engage in "transfers."

But just because some entity can be considered to exist on the same "continuum" as crypto brokers, doesn't mean there isn't a clear division between them: https://rationalwiki.org/wiki/Continuum_fallacy

One could also contort themselves into the assertion that convenience stores engage in transfers with "digital assets" (shifting credit via digitally created loans provided by Visa).

Maybe I should publish an article saying this legislation will require 7-Eleven to report to the government every time you buy a twinkie? That'll really get some clicks!

> the proposal would seek to expand the definition of “broker” under section 6045(c)(1) of the Internal Revenue Code of 1986 to include anyone who is “responsible for and regularly providing any service effectuating transfers of digital assets”

Then this appears to be false

> something that isn't actually in the legislation

Because "digital asset" is extremely broad and can easily be seen to cover things like video game inventory items.

Is there a specific and detailed definition of "video asset" in the legislation?

Practically, the Secretary and the courts will decide what this means.

If you’re using in-game tokens to represent value and maintain a ledger, then sure, that could count. Which is good. why should it be possible to sidestep this law by creating a coin that is liquid and fungible and has etfs that track it but just happens to be used for in game purchases? That would be a silly and absurd loophole.

If your in game currency is one-way, ie can’t be converted back to USD or any other assets, then it’s by (legal) definition not representation of value.

Because if I make a game where items drop, and players can transfer items between each other, but not convert any of it to real world money... then making the system, or possibly every single player, be responsible for reporting all activity and participants to the government is... to be blunt, bat-shit crazy?

Beyond that, it depends, but the answer definitely isn’t “no”. That’s true even today, btw: game companies can’t knowingly allow money laundering through their in game currency, for example, and gambling laws almost always apply if you can cash out and the game contains any type of chance component (eg loot boxes).

Basically, if your game is setup in a way that could be trivially used for transferring real world assets between players, even existing regulations probably already apply. This is one of many reasons most games only support one way transactions — you can move money into the game but not back out (at least without breaking tos)

“X but in a video game” is almost always actually really X when it comes to money and other assets that can flow into and out of the game easily. A VR Wells Fargo branch is still a bank.

That's a pretty far cry from needing to report "user data, including users’ names and addresses" for every in game transfer of digital assets. (As noted in another message, it's still unclear to me if that's what the bill is requiring).

> Value sometimes expresses the inherent usefulness of an object and sometimes the power of purchasing other goods with it. The first is called value in use, the latter value in exchange. Value in use is the utility of an object in satisfying, directly or indirectly, the needs or desires of human beings. Value in exchange is the amount of commodities, commonly represented by money, for which a thing can be exchanged in an open market. This concept is usually referred to as market value.

Conceptually, in game items certainly have a an "inherent usefulness", in that they make the game more enjoyable for the person (or person's character) that possesses the item. This value is transferred between players regardless of whether or not the game provides a way to convert it to real money. For all practical purposes, it is impossible for any game that supports trading assets between characters to completely prevent interactions of the form "if you give me this item, I will give you some amount of real world money".

It seems that any in game assets meet the legal definition of value (that I understand from that page). This would mean that any transfer of said assets between characters would need to be reported on.

I'm open to clarification/correction, with a clear statement that my understanding of this is extremely limited. But it seems like the above is accurate. And seems to fall into the previously mentioned "bat-shit crazy" bucket, if true.

[1] Value https://legal-dictionary.thefreedictionary.com/Value

(Digital) representation of value means something more specific in the context of securities law. Something that has intrinsic value but cannot be used as a medium of exchange, unit of account, or store of value is unlikely to be regulated as a security.

There's the thing though. The minute you get to the point where the law is ambiguous, you start seeing law enforcement using it as leverage to get what the want. If the bar is "can they convince a judge that this should count", then they an use it to screw someone over.

I'm in favor of strong limitations on the powers granted to government officials, because there ARE bad apples; and giving the good apples power means the bad apples can decide to ruin someone's life because they can.

But thank you. I very much appreciate you taking the time to put forth your thoughts / knowledge on the subject.

Regulations are rarely explicitly legislated because legislative bodies don't have the time or expertise to maintain the specifics of regulations. Of course, you always want there to be appropriate scoping, but some division of responsibility between the executive and legislative branches is necessary.

I think a good middle-ground here is the updated language from Wyden et al.. I'm not sure how much leverage they have, though -- (D)s won't defect over this issue and it's unclear whether people like Toomey could be brought on board. And if it's not going to flip votes, then changing the language isn't really worth the lift. I would guess the best way to get this change adapted would be to pressure Toomey to vote on infra but insist on this change -- a single additional (R) in the Senate would make this language change over night. But, again, I kind of doubt Toomey considers this a wedge issue.

> If the bar is "can they convince a judge that this should count", then they an use it to screw someone over. I'm in favor of strong limitations on the powers granted to government officials, because there ARE bad apples; and giving the good apples power means the bad apples can decide to ruin someone's life because they can.

It's not just a judge or a single official. The Secretary will create rules through the regular rule-making process. And then those rules might be challenged in court.

I believe digital asset is a defined term in this legislation, though the quote doesn’t show any capitalisation.

These definitions are critical and updates to modify a definition without modifying the text can still have dramatic affect.

Pardon me for having a legal education and knowing that prosecutors are often more than willing to bend over backwards and squint through one eye.

If it's possible for a prosecutor to argue it, they will eventually argue it, and most of the time the courts won't push back.

They only need the thinnest veneer of legality in order to abuse their power.

You mean that squinting and bending that DAs often do to get some ridiculous plea bargain from some innocent schmuck?

>>Law professors and lawyers instinctively shy away from considering the problem of law’s violence. Every law is violent. We try not to think about this, but we should. On the first day of law school, I tell my Contracts students never to argue for invoking the power of law except in a cause for which they are willing to kill. They are suitably astonished, and often annoyed. But I point out that even a breach of contract requires a judicial remedy; and if the breacher will not pay damages, the sheriff will sequester his house and goods; and if he resists the forced sale of his property, the sheriff might have to shoot him.

>>This is by no means an argument against having laws.

>>It is an argument for a degree of humility as we choose which of the many things we may not like to make illegal.

"Disaster" is a loaded word, but of course it would be a huge privacy improvement if they didn't!

This isn't like that at all. This would be like the government requiring Microsoft to KYC every single user of Excel, because people use their software to manage money.

This is like saying "The Internet is for porn" because that's your only exposure to it. Yes, it's the most common early use - but it's very far from the only use.

If you couple things badly, you can end up with more responsibilities than you want

The central premise of these projects is that humans make terrible decisions, markets make good decisions, so let's replace humans with markets whenever possible. Right now, some exec at Google determines how many ads you see on the Internet. The premise of Brave & BAT is that you decide whether you want to see ads on the Internet, you get compensated for viewing them, and if enough people decide the ads are not worth their time, they'll turn them off and drive the price of BAT up enough that people do want to view them.

Right now, some exec at Amazon decides how much you pay for S3. The premise of FileCoin & IPFS is that lots of ordinary home users have spare hard drive space, and they should be able to be compensated for renting out that space to projects that need lots of distributed storage. The market price of FileCoin is that which equilibrates demand for storage with supply.

S3 is centralized.

This is not an apples to apples comparison.

Compensation is what is driving the decentralized ecosystem (including payments, file storage, among the other things mentioned in this thread).

https://greentradertax.com/a-case-for-retail-forex-traders-u...

Yes. Do you not? They have no right to that information. Why do so many in the "hacker" culture simp for the authority structure?

Pretty sure I get to call myself a hacker in any sense of that word.

I’m a fan of KYC and paying taxes precisely because I’m a hacker and can immediately see how easy it is to hack civil society without those things.

Also, this isn’t a forum for hackers in any definition of the word. It’s a public discussion forum run by and often for the benefit of a powerful and rich VC firm with substantial investments in alt fin tech speculation. are you sure you’re not the one simping?

(Personally, I think the wording has to be tightened. My only stance is crypto should be on-par with other banking laws. No special treatment. Crypto should (hopefully) succeed but shouldn't become a refuge for money laundering, facilitation of crimes and other less than desirable activities. It could lead to long term harm for the ecosystem than adding KYC and making it mainstream.)

If you don't believe that the government should be allowed to attempt to tackle money laundering, that such crime is simply to be shielded at all cost from being reduced, then that's another.

So the question is "what do you want?".

And the cryptocurrency community has been completely unable to present anything that isn't literal anarchy or feudalism. And guess what, nobody will be able to sell anarchy or feudalism to the general public, or even outside a very very small community.

This other comment said it better: https://news.ycombinator.com/item?id=28047145

Yes. Clearly.

My car doesn't keep an up to date record of my name and adress so it can report my position and speed to the authorities. Warrantless wiretapping is illegal in most (every?) form outside finance, and there's no justification for banks or investment firms being any different.

Governments have a right to make laws, they don't have a right to continuously monitor every citizen to enforce them.

Yes.

Yes, I do. The IRS has slowly gathered power since 1913. Federal taxes were supposed to be short term and temporary, for war levies and such.

Furthermore, the tax code within the constitution controverts itself: "all Duties, Imposts and Excises shall be uniform throughout the United States" - I.8.1

It results in yet another area where "laws are for little people."

(It's an unfortunate feature of the weightlessness of modern money, crypto or otherwise, that proportionate privacy is now hard. In the old days, if you wanted to move a lot of money, especially internationally, you had to go to a lot of physical trouble: https://www.rte.ie/news/newslens/2019/1204/1096878-poland/ ; this was hard to hide and easy to intercept. Nowadays you could theoretically move billions with a brainwallet. The binance cold wallet is twice as much as the Polish wartime gold: https://bitinfocharts.com/top-100-richest-bitcoin-addresses....

So we end up with a situation in which in order to track the large transactions a system is built which tracks all transactions.)

Mining is a core function. None of it works without that (or staking, which is equivalent). A miner is not able to know who you are, since the regulated exchanges are not reporting their KYC to all the miners. Making miners responsible for sending 1099s would effectively make it illegal to run public blockchains.

A very rough sketch of such a system:

- Any exchange that wishes to offer crypto services to US citizens must do KYC according to the existing regulations.

- Those exchanges make available each day a file with all the KYC-ed wallet adresses.

- Miners can theoretically choose which transactions to include and which to reject, but at the moment the main (only?) criterion is how much fees are attached to the transaction. You could mandate that they also do a lookup into the KYC data and only accept the transaction if the sending address is present in the list.

- I could even see the SEC or some other central body (perhaps one per country) maintaining such a list, exchanges submit their lists and miner can download it. This is already done in several other sectors of the economy.

And why would you do this? The KYC you're making public is already available to the government, and the on-chain transactions are already public.

One cold hard look at https://usdebtclock.org/ is enough to convince me that paying taxes to the US government is not a moral imperative. Every penny I pay is going towards paying off a massive ever-expanding black hole of debt that is mathematically impossible to ever pay off, the government is going to spend the same amount regardless of the revenue it collects since the Fed just prints it all anyways. So what's the point in "paying your fair share" in such a system? You'd be a fool not to evade as much as you possibly can.

There are definitely bad tactics and real loopholes, but this isn't the main problem. The real problems are more subtle and they require trade-offs.

These problems won't be solved as long as the tax code remains as complex as it is.

Massive tax regulation is a surprisingly recent invention.[1]

[1] https://www.politifact.com/factchecks/2017/oct/17/roy-blunt/...

EDIT: the parent author's very strongly worded statement isn't true. I'm trying to add clarity to a vague statement, not wage an ideological battle.

And nothing of value will be lost

Progressive taxation benefits society at large.

... claim the poor and the people who make their money off capital gains.

Who gets to decide what "good for society" means in context of taxation is possibly the most political question out there. It is not at all obvious that making the most productive people pay most of the burden gets to the best outcome.

It is one philosophy that there exists some line, some fuzzy DMZ that gets crossed between being merely "wealthy and more prosperous than others" and obscene. Colloquially that seems to be "billionaire" but I bet a lot of people on the farther-left would define is somewhere north of $10 million.

Especially in a country so far behind the rest of the developed world with regards to access to health-care and housing for so many millions of people.

the opposite arrow is not necessarily true, but one wonders if there isn't a 'baby with the bathwater' effect with progressive taxation.

As a software dev that can be a hard pill to swallow.

Not to mention there are many efficiencies that come with this system which would likely cause prices to even out over time near their current levels or just slightly higher.

Though, of course, you then need even more reporting than we already have, but it would have the upside of no longer disincentivizing work like the current system does, and rewarding savings over spending too.

And from the perspective of someone who actually works in tax: the "FairTax" simply pushes all the complexity to everyday transactions, instead of minimizing it to periodic transactions occurring 1-2 times a month (with reporting once a year). It would hugely disincentive paying for actual things, and artificially incentivize (untaxed) services over (heavily taxed) goods.

Moreover, the "FairTax" rate would be 30% or more on all purchases. Not only would the FairTax would obscenely regressive in effect, but a tax rate that large would push a substantial portion of the economy underground!

There's so much wrong with "FairTax" that it should be called "Ridiculous Tax."

While I agree with much of your post, current taxes on income (featuring reduced taxes on capital income, exclusion of most income from gifts/inheritances, and supplemental taxes on labor income [“payroll tax”]) absolutely disincentivize working for income if you have choices of how to get income. Now, lots of people don't have choices and are stuck with work, but that doesn't mean there is no disincentive effect.

(Of course, “treat income as income” makes this much fairer than the status quo, much less the laughably misnamed “FairTax”.)

(Note: payroll taxes such as FICA, etc., actually phase out pretty quickly after $100k in earnings, so they're regressive in nature. There is the high-wage supplemental tax, but this is offset by the cap on income subject to SSI tax, so workers earnings more than $140k actually pay less in payroll tax.)

That being said, I agree that capital gains should be treated as regular income (as it was historically, pre-Reagan) and that income received via gift/inheritance should not receive a FMV cost basis.

I think the people who argue for higher taxes on wealthier brackets also argue for capital gains to be taxed at a similar/equal rate to income.

The actual effect is that you need to actually have a huge wealth disparity between partners' earnings for the so-called marriage penalty to kick-in. Fox News notwithstanding, the overwhelming majority of married couples will not see a marriage penalty.

Even if you did not mean to suggest FairTax and you mean something very different, your proposal still ends up being significantly more complicated than an income tax, since now taxpayers must track all purchases made over the year rather than the relatively limited sources of income they have. Your proposal would increase the compliance burden on buyers, sellers, and the government.

By not tracking purchases individually, and only inferring the total amount of money spent by subtracting savings from income, you can also apply brackets to purchases, and thus avoid the regressive nature of a "simple" flat sales tax.

There will always be a black market, but eventually that money has to flow back into the regular economy (food, housing, etc...) and will be taxed.

Savings: unknown (held in cryptocurrency, private)

Tax: divide by zero error

Besides, doesn't the US already have sales taxes? Or are they state-only? I'm starting to favor a tax on real estate and/or land value, since that's physically impossible to hide.

State. City. County. Sub-divisions of same that are special sales tax districts and have extra sales tax applied. Not every instance of those entities applies a sales tax, but any could and many do. Basically everything except federal. The sales tax where I am, in a "red" state, is about 11% (we actually have a really high effective all-inclusive tax rate in this state, for how entirely shitty government services and infrastructure are)

> I'm starting to favor a tax on real estate and/or land value, since that's physically impossible to hide.

The challenge with that is the system for assigning value—everything else about it is easy. We already have something close to what you'd need in the US because real estate property taxes are common. That system's not perfect but it may still be good-enough, despite its flaws. It seems to work kinda OK. That might change if that became a more important revenue source, and for more levels of government, though.

Citation needed.

Also, why do you think crypto people think that rich people should pay no tax?

Anyone who believed governments of the world would sit by and say “oh, a technology that can greatly aid in tax evasion, we’ll just let this grow with zero input from laws” are fooling themselves.

If adopted, a cryptocurrency can perfectly serve an ecosystem as an exchange of value, without ever crossing the barrier to the mainstream monetary systems. I.e. a loaf of bread for a certain fraction of a Bitcoin.

Sure, most minor barter transactions are ignored as de minimus, but that does not make it legal (i.e., not tax evasion).

So paying your neighbor for a loaf of her home baked bread with a wad of coupons for the local store (or Satoshis) is probably ignored because she is not an official business, but if you do the same at the store, or she grows to anything beyond casual home cooking, the store and your neighbor will need to pay both sales tax and income tax - in fiat - on those transactions.

Same goes for us trading anything large, say we barter my car for your boat (or a bunch of BTC, gold, gift cards or whatever), we'll have to pay taxes on the transaction, in fiat. And we may have the additional pleasure of needing to get an appraisal too.

So the idea that crypto currency could never touch fiat was never anything more than a lovely figment of the internet imagination.

Meanwhile, in the real world, without such wealth taxes, the problem is not' how do we accept all these donations and what do we do with the surpluses?'. The problem is that the wealthy spend enormous sums both capturing regulators to minimize tax, setting up legal structures to avoid tax (trusts, corps, etc.), and setting up outright illegal global tax evasion schemes.

What you propose does not even work on the scale of a condo building. That Miami building that collapsed couldn't even get agreement for years in time to expedite critical repairs, and it killed like half the residents.

Even myself, I'm proud to pay my taxes, understand that in every large complex endeavor or system there will be significant things that can be called out as 'waste', yet I also take advantage of every tax break my accountant recommends.

Enjoy your fantasies, and let us know when you are interested in joining the real world.

That's why bundling taxes in a few non-optional packages is so important. Otherwise people will try to selfishly evade paying for services they believe they don't need, and needlessly pry into public finances despite having no expertise in it.

A recent great example of why they don’t notice. Rich individual 1 was paying for an employee’s children/grandchildren to go to school while deducting that money from his salary via a second set of books. Rich individual avoids payroll tax, employee avoids income tax, and on the surface it looks legal except the second set of books made it a clearly illegal action. It’s exactly that mix of personal and business activities that makes such criminal evasion so hard to track.

Another interesting example of not prosecuting, personal Roth IRA’s may not invest in companies under specific conditions and transactions must be at the fair market rate. Rich individual 2 broke both rules, but the IRS investigation decided to leave it alone. This is adding up to hundreds of millions of dollars in tax fraud, but if the IRS chooses not to prosecute then he’s free and clear.

PS: Names redacted to avoid political discussion.

Advocating murder on HN is wildly inappropriate behavior, genocidic bunny.

Look up the punishments for being a traitor. In most countries, treason is punishable with the death penalty. I see rich people avoiding taxes as a low-level treason. They extract wealth, while damaging society across all strata -- in a way, they are betraying the fundamental underpinnings of society. That should be treated as a sort of treason, and suffer the same punishments.

So it's a murder "technically physically" but not "technically legally".

PS: I'm not endorsing death penalty in anyway. I oppose death penalty.

There is such a thing as legal murder.

So are these not murders because they are legal?

Okay, let’s use another example. Is software piracy stealing? Some people claim it is. I don’t, because words have meanings.

Murder is a killing that is not just.

There have been many legal murders. (Look at the Ruby ridge incident for a non recent example)

> the unlawful premeditated killing of one human being by another.

According to international law, they were committing murder.

Murder is defined as illegal homicide. As such, it can only be really be discussed in the context of a legal framework. But there can be many legal frameworks at play in any one place/instance.

From the Oxford dictionary, there is more to the meaning than your shallow lawful vs unlawful demarcation line:

. a. The most heinous kind of criminal homicide; also, an instance of this. In English (also Sc. and U.S.) Law, defined as the unlawful killing of a human being with malice aforethought; often more explicitly wilful murder. In OE. the word could be applied to any homicide that was strongly reprobated (it had also the senses ‘great wickedness’, ‘deadly injury’, ‘torment’). More strictly, however, it denoted secret murder, which in Germanic antiquity was alone regarded as (in the modern sense) a crime, open homicide being considered a private wrong calling for blood-revenge or compensation. Even under Edward I, Britton explains the AF. murdre only as felonious homicide of which both the perpetrator and the victim are unidentified. The ‘malice aforethought’ which enters into the legal definition of murder, does not (as now interpreted) admit of any summary definition. Until the Homicide Act of 1957, a person might even be guilty of ‘wilful murder’ without intending the death of the victim, as when death resulted from an unlawful act which the doer knew to be likely to cause the death of some one, or from injuries inflicted to facilitate the commission of certain offences. By this act, ‘murder’ was extended to include death resulting from an intention to cause grievous bodily harm. It is essential to ‘murder’ that the perpetrator be of sound mind, and (in England, though not in Scotland) that death should ensue within a year and a day after the act presumed to have caused it. In British law no degrees of guilt are recognized in murder; in the U.S. the law distinguishes ‘murder in the first degree’ (where there are no mitigating circumstances) and ‘murder in the second degree’ (though this distinction does not obtain in all States).

https://www.oed.com/oed2/00153783

I run a HFT operation, and just computing my US tax returns required thousands of lines of code of custom software. And then to actually file it, I print off a PDF, thousands of pages long of each and every individual trade. Not a CSV, not a data file, literally a printout. As if some IRS accountant is going to manually go through millions of rows line by line with an adding machine.

Of course, the IRS cannot and will not check every transaction. But I do wonder if they actually verify some subset of the reported transactions, or would this only happen in an audit?

That's the point. They reserve the power of arbitrary enforcement early on because they don't know what the stuff they won't like will look like. So then they'll go after anything they don't like and leave it up to the courts and the legislature to clean up the mess.

Do they define digital assets? Because my Google Doc is a digital asset. If I transfer it to a friend, is Google now a broker?

Does that include PDFs, audio books, software, and photos? Web apps or plugins? “Asset” is monstrously vague.

Does Drivethrurpg have to worry about this?

In that law, anyone who actively assists in the transference of valuable tokens need to ensure that they're not assisting in the transfer of value that originates from crime.

And since a miner has explicit choice of what transactions to include in the block, this means that they cannot hide behind a "common carrier"-like[2] exception.

[1] Nope, don't even pretend to be a lawyer in secret, and I may have missed some subtleties. [2] This is basically what protects the inter-bank transfer services, the banks themselves are on the hook for preventing money laundering transactions to get that far. But since anyone can place a transaction into the pool, this is not applicable.

Cryptocurrencies are not "clever" for avoiding laws.

The willful stupidity that a lot of posters on here need to engage in to get some crypto bashing points is amazing.

Ironically, this will not hurt crypto at all. It will only hurt US companies by driving them out. US residents will still be able to access and use smart contracts supplied by foreign startups unless the government makes crypto completely illegal.

so running your own bitcoin node lands you with one foot in jail

Or as it is otherwise known, abide by the same KYC rules as banks.

I'd guess the vague wording is to allow regulators and the judiciary to respond flexibly to changing practices. It might be broad but it isn't poor lawmaking: it does exactly as it intends to. Even using brokerage as an analogy makes sense to respond to a system in which by design almost everyone of significance is a middleman of some kind.

Fundamentally this is what will allow bitcoin to thrive: this is part of the process of becoming legitimised. It isn't what the crypto-libertarians hoped for, but what they hoped for in the beginning was endless deflation, untaxable income and speculative gains. It wasn't good for anyone but them.

This is a step to something better, namely a new financial system in which upstarts are able to enter quickly and on technical merit alone. That is worth a lot, and won't happen without bitcoin entering the regulated mainstream.

> We believe you had drugs on you, even though we couldn't find them. We also see you play World of Warcraft and that you're used the in game auction house to sell your items for in game money to other players. If you don't please guilty to the drug charge, we're going to hit you with 1,000+ counts of of violations of the IBCSP (or whatever this law is called); you'd be looking at 1,000 years in prison and a 1,000,0000$ fine, minimum.

The US government _does_ things like that. And, as such (because they have shown they cannot be trusted to act in the spirit of the law), we need to limit what powers we give them. I find it astonishing that anyone doesn't realize this.

Upstarts are able to enter quickly based on technical merit alone RIGHT NOW. How does adding regulation simplify that for them? It doesn't - it makes it far more restrictive. You must be on crack to believe these provisions "help" crypto assets. This bill goes against the design philosophy of peer-to-peer transactions.

I don't think "design philosophy" will be enough, though. The points to make might be more like: is the regulation in normal finance fit for purpose? Should there be an electronic version of cash within some limits and could that be partly done with crypto (same discussion as with CBDC at the moment). Should there be a difference between an individual miner and an industrial one?

Failing financial systems can have huge social and policy implications so technical merit is but one consideration.

Yes: because that design philosophy is counter to that of consumer friendly, regulated markets. What will make bitcoin mass market is the ability of regular investors to get involved with the kind of safety net regulations require. The alternative being that bitcoin maintains its already shady reputation as something for money laundering and buying drugs (crack, perhaps?) online. Cleaning up that reputation and its causes is the job of regulation, and it will work.

This proposed regulation doesn't address the problems you evoke, and its an attack on fundamental human rights such as privacy.

[1] https://www.forbes.com/sites/haileylennon/2021/01/19/the-fal...

The regulatory system, and people who are ok with deferring to it in its existing incarnation (i.e. the revolving door between people within TBTF bailouts-every-day with "open" "market" operations banks [where these cash dollars inevitably end up] and the people who "look" after them system), are fine with this because slaps on the wrists and fines are considered the cost of doing business and there can't be anyway possible to live and exchange value without them being involved under the guise of "protection" or "else" racket.

Robin Hanson would probably call this phenomenon a form of "Elite Tax" on society. [0]

[0] https://www.overcomingbias.com/2021/08/how-high-our-elite-ta...

This is a trap I've seen many technical folks on HN fall into - they define "useful" along the lines of "beneficial", or "productive", or "worthwhile", rather than simply "is used". Think of casino tokens. They have no intrinsic value, and can only be used within very limited set of environments, so you could think of them as useless in the strict sense. But that doesn't stop large numbers of people using large numbers of them on a regular basis, and the operators make hundreds of billions a year from the people using them, so they are "useful" in the sense of "being used" to serve a strong human desire (just not to make the world a better place).

So, sure, cryptocurrency startups can innovate a new way of making money. But it doesn’t make them useful. One could argue it doesn’t even make them not harmful.

Those are huge valuable use cases. However it doesn’t follow that we should necessarily facilitate those uses.

To my thinking, provably fair casino games are a useful innovation that sprang from cryptocurrency. Decentralized poker is another. If you find the entire global gaming industry useless, then I guess those are also useless innovations. Again, that's a value judgment.

I don't think it's fair to conflate the people/businesses trying to profit from the crypto speculation craze, pyramid shemes or shitcoins, with e.g. businesses that want to accept crypto to avoid paying a % of their income to Visa. Yet that's what this law would do.

Very good point about the provably fair casino games. I didn’t even know they exist. However note that casinos are regulated too - you can’t eg serve minors.

(This question often leads to moving goalposts and quibbling over definitions of "useful innovations".)

It just puts a nail in the coffin of the idea that blockchain is going to be some libertarian dream of freedom from regulation and a magic bullet for getting around rules. Of course this was coming.

There are a lot of positive or interesting aspects to crypto, but the prevalence of tax evasion, money laundering and grifts of varying scale dominates the conversation. Regulation is inevitable.