While a significant legislative achievement for U.S. President Joe Biden, the US$1 trillion bipartisan infrastructure bill signed into law on Monday included provisions relating to cryptocurrency tax reporting requirements that has many in the industry nervous.
Fast facts
- As Forkast.News previously reported, provisions were added to the bill as it was being drafted in August which sought to raise a projected US$28 billion to fund the bill by increasing reporting requirements for cryptocurrency “brokers” with the Internal Revenue Service. The main concern was over the broad definition the bill took for broker, which included any party facilitating the transfer of digital assets.
- Crypto advocates argued this definition could theoretically include validators of networks, which would not only be stifling to innovation but actually be impossible, as validators do not collect know-your-customer details due to the nature of the technology. Another provision in the bill broadly opposed by the crypto industry would require any recipient of more than US$1,000 to verify the sender’s personal information, including Social Security number, and report the transaction to the government within 15 days.
- In order to address this, Senator Cynthia Lummis introduced a bill on Monday to rewrite the tax provision to narrow the scope of what would be considered a broker, to exempt blockchain validators, non-custodial hardware or software vendors and protocol developers. “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.”