Senator Cynthia Lummis and others are now attempting to narrow the scope of the law’s crypto broker clause with a separate bill.
President Joe Biden signed into law Monday the $1 trillion bipartisan infrastructure bill, which contains a controversial cryptocurrency tax reporting requirement.
- The crypto industry was concerned about a tax reporting requirement within the bill that sought to expand the definition of a broker for Internal Revenue Service purposes. The bill would require all brokers to report transactions under the current tax code.
- Industry proponents worried the definition would be too broad, capturing entities such as miners and other parties that don’t actually facilitate transactions.
- Sen. Cynthia Lummis (R-Wyo.) and others are attempting to narrow the scope of the law’s crypto broker clause with a separate bill introduced Monday.
- Another provision opposed by the crypto industry essentially requires recipients of transactions over $1,000 to verify the sender’s personal information and record his or her Social Security number, the nature of the transaction and other information, and report the transaction to the government within 15 days.
- Some lawyers have pointed out that when applied to cryptocurrencies and other digital assets like non-fungible tokens (NFT), it would be nearly impossible to comply with the law.
Senator Cynthia Lummis (Republican-Wyoming.) on Monday mounted a last-ditch effort to narrow the bipartisan infrastructure bill’s crypto broker clause. The bill is expected to become law later today when signed by President Joe Biden.
Lummis, an ardent crypto advocate, introduced a bill to rewrite a controversial tax provision that critics have said would stifle the U.S. crypto industry. In its place, she proposed language that appeared similar to a compromise agreement considered earlier this year.
The proposed language would exempt blockchain validators, non-custodial hardware or software vendors and protocol developers from the definition of “broker” and its myriad tax implications.
As it currently stands, the bipartisan infrastructure bill defines “any person who is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person” as a broker.
“We need to be fostering innovation, not stifling it, if we are going to maintain America’s position as the global financial leader,” Lummis said in a statement. “I’m proud to introduce this bipartisan bill to ensure that our tax system reflects the realities of digital assets and distributed ledger technology.”