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Congress Takes Its War on Cash to Digital Assets

Understanding Tax Code Section 6050I

The United States government really does not like Americans to make large cash transactions. Now, due to a new law, it really, really does not want Americans to use “digital assets,” either. My goal is to convince you that the first claim is true. The second claim will then be self-evident.

Of course, no one cares about cash anymore, except criminals. We’ve always known something better: bank accounts, paper checks, and wire transfers. Cash has been obsolete for meaningful commerce for a long time, and since 1984 we’ve had a law in place to make sure it stays that way. Cash, as a tool for large, non-criminal transactions in the modern economy, is dead. Cash is a relic.

This essay is about section 6050I of the tax code, the 1984 federal law that helped make cash obsolete. It’s important because the same law is now being aimed at digital assets, through an amendment to section 6050I that was signed into law on November 15. The new law subjects digital assets to the same reporting requirements as physical currency. The amendment, a mere eight words long, appeared on page 2,422 of the trillion-dollar Infrastructure Investment and Jobs Act.

I believe, and have begun to argue elsewhere, that concerns over tax collection, money laundering, and national security cannot and will not justify the new law just passed by Congress. Financial liberty and privacy, the Fourth Amendment, innovation, and American competitiveness count for something. And, physical cash and digital assets are less similar than Congress appears to think.

But those arguments are for another day. They require facts about what 6050I means and how digital assets work, which Congress doesn’t have yet because the proposal was quietly inserted into the bill and passed without debate. The amendment must therefore be immediately repealed so that Congress can study what’s at stake and legislate in a manner befitting a constitutional democracy. Hitting the “start over” button requires awareness that 6050I is a big deal.


The newly amended law is difficult to understand, in part because it often makes no sense applied to digital assets.

But the old law is complicated, too. Few notice this because cash is already obsolete. But since everyone understands cash, this essay will focus on the old law. If you understand the old law, it’s easy to see why the new law will make using Bitcoin and other digital assets as rare, burdensome, and criminally suspect as transacting in bricks of cash.

So again, my goal is to convince you that tax code section 6050I, which was passed by Congress in 1984, discourages a disfavored technology — cash. Today, if you use large amounts of physical currency, there’s something wrong with you, and it’s probably that you’re a criminal. It’s such a legally fraught hassle that there’s no other explanation.

Banning large cash transactions outright would be awkward in the United States — Federal Reserve notes remain legal tender for all debts — but I want you to see that 6050I comes pretty close.

It’s no secret why the government disdains physical currency: cash makes it easier to cheat on taxes. And because cash is hard to find and to track, it facilitates all sorts of other crimes, too.

But discouraging cash is only half the equation. By discouraging cash, the law encourages people to use banks. You and I love bank accounts, paper checks, and wire transfers for their convenience. But the government loves banks for their reporting obligations under the Bank Secrecy Act. A key effect of 6050I is to encourage the use of banks and other financial institutions.

Perhaps the government’s policy is fine with cash, which even without 6050I would be near obsolete for significant, law-abiding use. But, the recently passed amendment to section 6050I is similarly aimed at discouraging a certain technology. And this time, it’s a new technology, not an obsolete one, and it’s one that some Americans are excited about. Congress calls this new technology “digital assets,” so we’ll use that term. It means Bitcoin, cryptocurrency, and indeed “any digital representation of value” using distributed ledger technology.

The fact that 6050I discourages certain technologies while encouraging others is critical. It’s critical because it is possible to misunderstand 6050I as a mere “information reporting requirement” that helps the IRS confirm your self-reported tax returns are honest. The tax code has a lot of reporting requirements. (This one is 6050-eye, not 6050-one. Section 6050A concerns reporting requirements of certain fishing boat operators; 6050Y concerns certain life insurance contract transactions.)

And on the face of it, 6050I is indeed a reporting requirement. It doesn’t explicitly ban anything. Technically, 6050I doesn’t even regulate cash transactions; technically, it just says that if you do one, it must be reported a certain way.

But the claim that 6050I is just another reporting requirement is either misinformed or disingenuous. It’s false for old-fashioned cash — as shown below — and it’s especially false for digital assets.

A Short History of Section 6050I

It’s possible to argue that 6050I is necessary to fight crime (although no one in Congress has actually made that argument with regard to digital assets). But it’s undeniable that 6050I discourages disfavored technology — and is then used to pursue those who, by refusing to use the government’s favored technology, expose themselves as likely criminals.

No law will dissuade everyone from using cash. Criminals can be stubborn. And so, section 6050I reporting generates a lot of data that can help go after criminals, and not just for the crime of tax evasion. The government quickly noticed 6050I’s usefulness beyond tax enforcement. The history of section 6050I — and 6050I data sharing — is important.

Under-reported cash income has always been a problem for the income tax system. But the catalyst for 6050I was the war on drugs and money laundering. Banks had to report $10,000-plus cash transactions starting in 1970 — $10,000 then is about $65,000 now — but in the early 1980s, Miami cocaine dealers were still paying cash for houses with impunity. Section 6050I was a tool to stop that. Like Al Capone fifty years earlier, criminals could be prosecuted for failing to file tax returns.

As explained below, 6050I is a complicated statute that applies to all businesses. But initially, compliance was low. The 6050I reporting form is called IRS Form 8300, and suspiciously few of these forms were being filed. To boost compliance, the Treasury Department focused its awareness campaigns and prosecutions on the obvious sectors like car dealers, real estate agents, jewelers, and intermediaries (like lawyers) involved in large transactions. Doing its part to boost compliance, Congress upgraded criminal violations of 6050I to felonies in 1988.

Technically, Form 8300 began as just a tax form. But tax forms are for, you know, tax administration, not general crime-fighting. It wasn’t always so clear-cut. Federal agencies used to have rather free access to Americans’ tax returns. By the early 1970s, however, things had gotten out of hand. After President Nixon got caught asking the IRS for dirt on his enemies, Congress established a commission to study the issue. In 1976 Congress passed a confidentiality law that restricted law enforcement’s access to tax forms. The basic rule became, no sharing for non-tax purposes unless Congress said it was OK.

Under 6050I the Treasury Department was collecting valuable information on suspicious characters but the data was going to waste. So, in 1988, Congress passed a law that allowed Treasury to share Forms 8300 with employees of any federal agency.

That law proved popular with federal law enforcement. But not all crime is federal crime. So, in 1996, Congress authorized Treasury to share Forms 8300 with any agency of any local, state and even foreign government.

Law enforcement liked this but there was still a problem. The process for sharing Forms 8300 with local, state, and foreign government agencies was cumbersome. Requestors had to persuade the Treasury Department they had adequate safeguards to protect confidentiality. Some law enforcement agencies had a hard time with all the rules.

So Congress did something very creative. In 2001, it copied the text of tax code section 6050I and passed it again as a new law, this time codifying it in a different part of the federal statutes. Today, 31 U.S. Code section 5331 creates essentially the same reporting requirement as section 6050I. But, section 5331 is under the Bank Secrecy Act, which has laxer rules on sharing data than the Internal Revenue Code.

Today, when you file an IRS Form 8300, you’re also filing a FinCEN Form 8300 that’s governed by BSA rules. It’s literally the same form. But FinCEN — the Financial Crimes Enforcement Network, another part of the Treasury Department — can use it in ways the IRS cannot.

So, when the local chief of police or a foreign government wants to know more about your suspected history of lavish cash spending, they don’t have to deal with IRS rigmarole on confidentiality and privacy. Instead, they go to FinCEN and request all the FinCEN Forms 8300 where you’re named in connection with large cash transactions.

But there’s a new twist. Congress just amended 26 USC section 6050I to include digital assets. But it did not also amend 31 USC section 5331.

So, the Internal Revenue Code mandates digital asset reporting (under section 6050I, the authorization for IRS Form 8300), while the Bank Secrecy Act (under section 5331, the authorization for FinCEN Form 8300) does not.

This is awkward. Why didn’t Congress amend section 5331 as well? The maneuver that enabled the 6050I provision to be quietly inserted, with no named sponsors and no debate, into a high-priority spending bill to fix America’s infrastructure, was that 6050I is technically a tax provision.

For this to work, the amendment would need to raise tax revenue to help pay for the spending. The FinCEN/IRS Form 8300 program is actually rather expensive and is not known as a revenue-raiser. But in its evaluation of the infrastructure bill, the Congressional Budget Office declared that, taken together, the three digital asset provisions in the infrastructure bill would indeed bring in some additional tax dollars that, on paper, would offset the bill’s $1 trillion price tag. The publicly available CBO report did not show its calculations and indeed did not provide any numbers specific to 6050I.

Section 6050I is an anti-crime law. But is it really an anti-cash or anti-digital assets law?

Section 6050I Applied to Old-Fashioned Cash

Section 6050I seems simple. It says that cash over $10,000 must be reported if received in the course of the recipient’s trade or business, and that the report filed with the government must include the source’s name, address, Social Security number, and certain other information. But it’s an unusual law. It applies to all businesses, not just traditional intermediaries. And unlike all other tax information reporting rules, violations are felonies.

I’ll focus on digital asset transactions in a future article. But as you’ll see, all of the old-fashioned cash transactions described below might also be done using digital assets, without using a bank — in ways that might be faster, more convenient, and less expensive than using banks.

And these are the simple examples. The potential of digital asset technology goes far beyond just replacing in-person exchanges of pieces of paper. Many uses of digital assets cannot be analogized to cash transactions. Section 6050I will effectively ban many of these uses, because compliance will be impossible.

If you’re familiar with digital assets, you will notice that the examples hint at other uses of digital asset technology. As an exercise, try to imagine how the recipient of the digital assets would comply with the reporting requirement in various real-world scenarios where the two (or more) parties are not meeting face-to-face.

Then, note how the requirement will encourage the use of banks and other “financial institutions” that are regulated under the Bank Secrecy Act. Transactions handled by financial institutions are generally exempt from 6050I reporting, and these financial institutions take care of all the reporting required under the BSA. This includes banks handling dollars, of course, but it also includes “money transmitters” such as Coinbase that handle Bitcoin and other digital assets.


Our story stars Paul, who runs his own restaurant. He’s a law-abiding type, but despite that he decides to use physical cash instead of banks. We’ll follow him for a week to see what happens.

The “trade or business” requirement is one of the most difficult parts of section 6050I. The average American signs just one tax form a year, each April. So Congress decided to limit 6050I reporting to those with more experience dealing with the authorities. Then and now, if you sell your used car for $15,000 cash, 6050I doesn’t affect you.

If you’re the average American, there’s no taxable income generated from a typical large cash receipt — like from the sale of your used car — that you might be tempted to hide in the first place. Plus, you’ll promptly deposit that $15,000 cash at the bank, so the government will still hear about it. The bank will immediately file a Currency Transaction Report as required under the Bank Secrecy Act.

Of course, in this situation the government doesn’t really care about you. It cares about the guy who paid you that cash. The bank’s Currency Transaction Report doesn’t capture that information. But Congress decided not to burden the average American with an obscure, complicated, and rare reporting obligation. ($10,000 in 1984 is about $27,000 today.)

So 6050I requires only businesses to report cash receipts. It isn’t a huge “loophole” — most physical cash that is received from someone other than a bank is indeed received by a business. But what counts as a trade or business?

In the 1980s, government inspectors knew one when they saw one. But it turns out to be a complicated question — indeed there is no satisfying answer under 6050I — and to determine whether 6050I applies, the particular facts about a person’s “gain-seeking” activity matter a lot.

In short: a person is subject to 6050I reporting if that person’s gain-seeking activity is adequately “regular and continuous” under the Supreme Court’s 1987 decision in Commissioner v. Groetzinger, such that the taxpayer’s business expenses are deductible under section 162 of the tax code — as opposed to, say, deductible under section 212 or 183. If you think this is an awkward requirement for proving that a crime has been committed, you’re right.

For now, we’ll keep it simple: Paul is indeed in the “trade or business” of feeding customers. Once that’s established, there’s no need to read up on sections 162, 212, and 183 of the tax code; questions over his business expenses are irrelevant. Section 6050I is not concerned with a business’s expenditures. It is concerned with “receipts” of cash.

Another requirement for 6050I to apply — that cash be received “in the course of” one’s trade or business — sounds much more restrictive than it actually is. The examples below will illustrate this. The very first regulations issued under 6050I said that “any cash received in a transaction by a corporation is considered to be received in connection with a trade or business in which the corporation engages.” The truth is slightly more complicated and that language has been removed from the regulations. But it is still a good rule of thumb.

But it doesn’t matter whether Paul’s business is a sole proprietorship or a corporation or takes some other form. For what follows, you can imagine that Paul is acting on behalf of his corporation, “Paul’s Restaurant Corp.,” just to make it easier to track whose money is whose. (Sometimes this means two sections must be filled out on the form instead of just one, but it doesn’t affect the outcomes.)

Introducing IRS Form 8300

Page one of IRS Form 8300

Report 1.

Paul decides to sell his catering and delivery van. A buyer, Flynn, shows up with a briefcase full of small bills and offers $40,000. Note that Flynn was not indebted to Paul, so federal law does not require Paul to accept payment in cash. Nonetheless, Paul accepts.

Tax code section 6050I requires Paul to report the sale of his work van by filing IRS Form 8300. This is a simple case, but there is something important to note. Paul is a restaurateur. He’s not in the trade or business of selling vans. But that doesn’t matter. Under 6050I, Paul’s receipt of the $40,000 cash occurs in the course of his trade or business and he has 15 days to report it.

The government estimates it takes 21 minutes to fill out IRS Form 8300. Paul must verify Flynn’s government-issued ID and must demand her Social Security number. He must note Flynn’s occupation and date of birth, and describe the transaction. Then Paul must sign the form under penalty of perjury and, within 15 days, mail it to the IRS.

(Paul can also become a registered “E-Filer” by creating an account with the Financial Crimes Enforcement Network’s “BSA E-Filing System.” Then, his business’s Supervisory User, and any additional authorized accounts, can file Forms 8300 online instead of by mail.)

Paul must later send the buyer a year-end summary statement, and he must keep a copy of the form available for inspection for five years.

If Paul misses the 15-day filing deadline or makes a mistake on the form, the minimum penalty is $250 (reduced to $50 if he fixes the mistake within 30 days of the deadline).

If Paul “intentionally disregards” his duty to correctly report the buyer’s information, the minimum penalty is $25,000. If the IRS were to fine him, Paul must pay the fine before he can challenge it in court.

If Paul “willfully fails” to file a correct Form 8300, he commits a felony punishable by up to five years in prison.

This is where the 6050I analysis usually stops, because non-criminals will immediately take that $40,000 cash and deposit it at the bank. That’s what 6050I “wants” to happen: to get that untraceable money off the streets and into the banking system, and make Paul think twice about using cash ever again. But Paul has decided not to use banks, so his continued use of cash quickly gets complicated.

Reports 2 & 3.

Eight thousand five-dollar bills weigh about 18 pounds and nearly fill the briefcase, so Paul decides to lower his profile. He arranges a trade with Ben, whose business makes a lot of change for cash customers. Ben takes the briefcase of cash and Paul ends up with 400 one-hundred-dollar bills.

Paul must report his receipt of the $100s by filing another Form 8300. The exchange of cash for other cash is a reportable transaction under section 6050I. Paul obviously isn’t in the trade or business of making change, but that’s irrelevant. Section 6050I is not concerned with taxable income or even revenue. It’s concerned with receipts.

But there’s more: Ben also received $40,000 in the course of his trade or business. So, Ben must report his receipt of the five dollar bills as well. Paul and Ben must each fill out a Form 8300 and report the other.

Reports 4 & 5.

Paul again considers depositing the cash at the bank, but interest rates are low and his bank would charge him a 0.3% fee to deposit the cash. Sam, a businessman across the street, is worried about making payroll. So Paul lends Sam $15,000 cash. Sam must report the receipt on Form 8300.

Four days later, when Sam repays Paul $15,010 cash, Paul must file another Form 8300, reporting Sam. Loans, and repayments of loans, are reportable transactions under 6050I. Once again, Paul is not in the business of moneylending — and Ben’s trade or business certainly is not “borrowing money” — but each must still report his receipt.

Reports 6 & 7.

Paul decides to buy another work van. One seller requires Paul to put $20,000 with a lawyer as a condition for withholding the van from the market pending Paul’s inspection. Paul delivers the cash to the attorney, who puts it in his office safe. The attorney must report his receipt using Form 8300.

The tax consequences of the attorney’s receipt are irrelevant. Custodial, trust, and escrow arrangements are reportable transactions under 6050I, as are receipts by agents. This is true even though the seller will not have to report his receipt of that $20,000 cash (if Paul buys the van) because it’s the seller’s personal van and the seller’s receipt of cash would not meet the “trade or business” requirement.

A few days later Paul decides against the purchase. But he isn’t able to pick up the cash himself. For a fee, a courier service picks up the cash. Another Form 8300 must be filed. The courier might have to file a Form 8300 depending on certain facts, but in this case the courier immediately delivers the cash to Paul and, because he has the attorney’s personal information, Paul is able to file the required Form 8300.

Reports 8 & 9.

Paul finds another van he might like but wants to test drive it over the weekend. The dealer demands a $15,000 deposit which Paul provides in cash. The dealer must report the deposit on Form 8300.

When he returns the van to pick up the cash, Paul needs to fill out another Form 8300. But as luck would have it the dealer is out and his 16-year-old daughter, Marion, is tending shop.

The dealership’s tax ID number and other information goes in Part II of the form, but Marion is the “Individual From Whom the Cash Was Received” and she must be reported in Part I. Marion is unsure of her SSN and she doesn’t yet have a driver license or government-issued ID for Paul to verify.

Paul explains why he needs them due to federal law. Thinking on her feet, Marion helpfully suggests, and then pleads, that Paul evade the requirement. He should, she says, accept $7,500 now and come back for the rest another day. Paul warns Marion that her words could be construed as a crime, as would be his decision to “structure” the transaction as she has urged.

As Marion searches the personnel files for her SSN, Paul notes her name and photo on the wall as Employee of the Month. Few lawyers would endorse Paul’s decision, but Paul fills out Part I of Form 8300 as best he can and details his efforts to verify Marion’s identity in the “comments” section on page 2 of the form.

Reports 10, 11, & 12.

Paul decides to buy a work van in Mexico, so he arranges to swap 25,000 of his dollars for pesos. Does Paul have to mail the government a report detailing his receipt of the pesos?

It depends. If the peso exchanger is in the “trade or business” of exchanging foreign currency, then he is a “dealer in foreign exchange” under federal law. This means the exchanger is a “money services business,” which in turn is a “financial institution” under the Bank Secrecy Act. This means the exchanger must file a Currency Transaction Report, the BSA requirement for banks and other financial institutions that is similar to the Form 8300 filed by businesses. Using discretion expressly granted to it by tax code section 6050I, the Treasury Department has indeed issued a regulation under the Bank Secrecy Act that exempts Paul from having to file Form 8300 when he receives pesos from a financial institution.

Alas, in our case, Mike, the peso exchanger, is not a financial institution under the BSA. So, yes: Paul must report the exchange using Form 8300, detailing his receipt of the pesos. Again, exchanges of cash for other cash are reportable transactions.

There’s more: Mike might also have to report the same transaction under 6050I. Exchanging dollars for pesos without registering with FinCEN as a money services business is not necessarily illegal. But, the fact that the exchanger is not in the trade or business of exchanging currency does not mean that the exchanger did not receive the $25,000 in the course of the exchanger’s trade or business.

Mike’s business is selling art, and he had made a number of sales where he accepted cash pesos as payment. So, Mike does indeed need to file Form 8300 to report his receipt of the $25,000.

Before leaving Mike’s gallery, Paul sees a one-of-a-kind artwork he thinks would attract more customers to his restaurant and perhaps even increase in value. He buys it from Mike with $11,000 cash. Mike must report the sale on Form 8300. Does Paul need to file one too? Of course not. 6050I imposes a reporting obligation on recipients only. Paul received something in the transaction — a painting, let’s say — but a painting is not “cash.”

Report 13.

Paul goes to Mexico and buys a van with the pesos. Does anything need reporting to the U.S. government?

Probably not under 6050I. (It’s possible, but unlikely, that the van seller in Mexico has to file Form 8300). But a separate federal statute, section 5316 of title 31, requires Paul to report the pesos on FinCEN Form 105 when he departs the United States. Driving back across the border on his way home, Paul won’t need to file another Form 105 unless the dollars, pesos, and monetary and other bearer instruments in his van value more than $10,000.

Report 14.

Back in the United States, Paul caters a party sponsored by four sisters and the bill is $12,000. Settling up, the five sit at a table and each sister hands Paul $3,000 in cash. Paul must file Form 8300, reporting each sister in Part I as an “Individual From Whom the Cash Was Received.”

Report 15.

Paul caters another party, this time for 100 patrons of the digital arts. He watches as one of them, Colleen, helpfully collects $110 in cash from the others and brings the $11,000 to him. Paul must report the receipt on Form 8300, after verifying Colleen’s identity and recording her details in Part I of the Form 8300.

But Paul’s not done yet. In Part II of the form, “Persons on Whose Behalf This Transaction Was Conducted,” Paul must list the names, addresses, and Social Security numbers of the other 99 partygoers.

Report 16.

Paul’s restaurant has extra warehouse space he rents out to Kristin. Kristin pays this month’s $2,600 rent in cash. Does Paul have to file a Form 8300?

Perhaps. Even if Kristin didn’t sign a lease, the transaction here is the rental of Paul’s warehouse, so payments in cash are added up over time. This is Kristin’s fourth cash payment, which pushes the total cash received during the preceding 12 months over $10,000.

So, yes: Paul has 15 days to file Form 8300. If and when Kristin’s subsequent cash payments exceed $10,000, Paul again has 15 days to file a new Form 8300.

Reports 17 and 18?

Two more, for extra credit:

Jessica finishes building the website for Paul’s restaurant. Per their contract, Paul pays her $12,000 cash, which he will later report by filing a Form 1099 with the IRS. Does Jessica need to file Form 8300?

Paul has an employee, Jim. After payroll deductions, Paul owes Jim $1,432.91 for this pay period, which he pays in cash. Does Jim need to report his receipt of his wages on Form 8300, if this pushes Jim’s cash receipts of wages in the previous 12 months over $10,000?

(I’ll save discussion of these last transactions for another time.)

***

Paul’s saga should prove the point: section 6050I discourages the use of cash while encouraging the use of banks.

As the examples are intended to show, the full consequences of 6050I are not immediately obvious, even for old-fashioned cash. Because cash is already obsolete, and because of the inherent physical limitations on using cash, these consequences are rarely exposed. Faced with a question over 6050I reporting, smart lawyers will have a simple answer: “Don’t use cash. Use a bank. If for some reason you’ve got cash, take it straight to the bank.”

This story should also make clear that the amended 6050I will likewise discourage the use of digital assets and encourage the use of banks and financial institutions.

Of course, the bigger point is that 6050I is more serious in the case of digital assets. Digital assets are not an obsolete technology attractive only to criminals. Digital asset transactions are not exclusively, or even primarily, a substitute for in-person cash transactions. Unlike cash, digital assets are indeed highly traceable — so edge cases and fringe violations are not so easily ignored and forgotten.

So, Paul’s adventures just begin to expose the extent to which 6050I will discourage digital assets and entrench financial institutions.

The revised section 6050I doesn’t go into effect until the end of 2023, so there’s still time to repeal it and start over. The optimist’s (and many lobbyists’) response to ill-considered statutes — particularly on complicated tax and financial matters overseen by the Treasury Department — is that the law can be fixed through regulation. (Section 6050I is rather concise, but the Treasury regulations, IRS guidance, and Form 8300 itself are detailed.)

This is always dangerous. Here, it is especially dangerous. The Treasury Secretary has limited discretion in crafting 6050I regulations. At the same time, the statute was written in 1984 for in-person hand-offs of physical objects occurring on American soil, so coherently applying its mandates to this radically new borderless technology would be quite the feat even if regulators had unfettered discretion. These problems deserve in-depth scrutiny before regulators get out their pencils. Even so, a few points can be made here:

Section 6050I does not authorize the Treasury Department to decide which cash transactions are dangerous and which can be overlooked — the statute itself establishes the reporting requirement. The statute itself establishes Treasury’s limited authority to exempt otherwise-reportable transactions (only if a financial institution is already reporting it under the Bank Secrecy Act, or if the entire transaction takes place outside the United States). And, the statute itself establishes the minimum information that must be reported (name, address, and tax ID number of the person or persons from whom the cash was received).

Benevolent regulators (and prosecutors) sometimes take liberties with statutory text to sidestep the full consequences of a bad law. And sometimes, when the results are taxpayer-friendly, there is no one in a position to complain. Indeed, if it comes to that, we will dutifully praise our regulators’ enlightened and merciful practical wisdom. But that’s bad — very bad, in fact — for the rule of law. And the next administration, or even the next bureaucrat, may have other ideas for the law’s enforcement.

Congress legislated crudely and Americans deserve better. If left in place, the constitutionality of the 6050I provision will be challenged in court. Congress should repeal the law instead, to allow full consideration of the issues at stake.

Bills have already been introduced to do just that. One of them, a bipartisan initiative, would replace the 6050I provision with an in-depth study. The bill, H.R. 6006, instructs the Treasury Department to consult with non-government organizations and to analyze 6050I’s consequences for privacy and liberty rights, access to digital assets and the financial system, innovation, and American competitiveness — and then to report its findings to Congress. Section 6050I does indeed warrant reasoned study and debate, before the world’s largest and still most dynamic economy relegates this new technology to the same bin of legislated obsolescence as physical currency.