Gary Gensler and SEC Will Benefit The Most from IRS & Treasury Rules In a Round-about Manner

1. **What is being proposed?**The IRS, with support from the Treasury, is considering treating smart contracts on Ethereum as brokers. This would mean they must follow the same rules that financial brokers do, such as verifying the identity of people using their services, under KYC laws. KYC laws are part of broader regulations aimed at preventing illegal activities like money laundering and tax evasion.
2. **Why classify them as brokers?**By classifying smart contract creators as brokers, every transaction could be tracked and recorded for taxation and anti-m___y l___dering purposes. This aligns with the goals of the B__k S_crecy Act and the Patriot Act, Fatca & OECD, in the U.S., which are key pieces of legislation in combating financial crimes and enforcing tax laws.
3. **Impact on software engineers and developers globally**This change means that any team, anywhere in the world, could be held accountable under U.S. law if they fail to collect necessary information from users, including Americans. This global reach is supported by various international treaties on tax and anti-m___y l___dering that the U.S. is part of.
4. **How does the SEC benefit?**The Securities and Exchange Commission (SEC) currently regulates securities markets in the U.S. and often engages in what's called "regulation by enforcement," especially in newer areas like crypto. Typically, the SEC can only pursue civil actions for violations of securities law (like unregistered securities sales). However, if smart contracts are deemed brokers, and developers fail to comply with these rules, they could face criminal charges, not just civil.This is a big deal because the SEC could then collaborate more effectively with other agencies like the IRS to enforce these rules. When it comes to cases involving significant missteps or omissions by crypto companies, having the potential for criminal charges could amplify the SEC's power. Essentially, it could pursue or support more severe actions against entities that fail to comply, making its enforcement actions more formidable.

By leveraging the increased obligations on smart contract developers to include KYC information, the SEC can extend its enforcement reach, ensuring greater compliance and potentially reducing the number of entities operating outside of regulatory frameworks. This change would significantly strengthen the hand of regulatory bodies in overseeing a largely unregulated digital space.

SOURCES SOURCES SOURCES SOURCES

-----Time for the best part, the extensive list of sources I'm bringing to prove that the US government intends to kill DeFi globally a full list of 2.5 years of twitter threads on the regulatory progress.

https://threadreaderapp.com/thread/1573815492523036672.html

https://twitter.com/TheCryptoCPA/status/1781403340045197813

https://twitter.com/CryptoTaxGuyETH/status/1781398204497400101

https://www.defieducationfund.org/_files/ugd/e53159_40d4255857d142f2a1744be79f1dab3f.pdf

https://twitter.com/valkenburgh/status/1781380879476043940

https://twitter.com/amandatums/status/1776293907929714757

https://treasuryraid.lexpunk.army/ - automated public commenting for the 82 page Treasury Proposal

https://twitter.com/CryptoTaxGuyETH/status/1695603888957641154 - Thread explaining the 82 page Treasury Proposal

https://threadreaderapp.com/thread/1695603888957641154.html

https://www.govinfo.gov/content/pkg/FR-2023-08-29/pdf/2023-17565.pdf - The full 82 page Treasury Proposal for DeFi Broker KYC requirements

https://www.warren.senate.gov/imo/media/doc/2023.10.17%20Letter%20to%20Treasury%20and%20White%20House%20re%20Hamas%20crypto%20security.pdf - Long spree of misinformation from Elizabeth Warren concerning Nation Security

https://twitter.com/propelforward/status/1715072779723137061 - Thread explaining the Patriot act and Fincen proposal on mixers which sweeps up DeFi

https://www.fincen.gov/news/news-releases/fincen-proposes-new-regulation-enhance-transparency-convertible-virtual-currency - actual fincen release on today's Patriot act proposals

https://twitter.com/duganist/status/1456228685137260558 - 2021 Infrastructure Broker amendment bill super thread

https://threadreaderapp.com/thread/1456228685137260558.html

you can learn about the law if you want to

Fatca

Fatf

OECD

Panama Papers

Obama administration CFTC cases against international forex and poker

online poker ban Black Monday Poker ban

Sar Suspicious activity reports

Controlled Foreign Corporation reporting

6045/6050 IRS statute

Bilateral extradition treaties

Corporate structure laws for Elligible Contract participants in the Dodd Frank Bill for the Commodities Exchange act https://www.law.cornell.edu/uscode/text/7/1a