The U.S. Senate voted to advance a $1 trillion infrastructure bill without amending a provision that broadens cryptocurrency tax reporting requirements.
The provision seeks to enforce stronger information reporting rules for tax purposes on the crypto industry by ensuring that any brokers report transaction data to the Internal Revenue Service. However, it also broadens the definition of “broker” to the point where critics of the provision believe miners, node validators and even developers who create cryptocurrencies might qualify. Critics also argued the inability to comply with new tax regulations could make it difficult, if not impossible, for these kinds of businesses to operate in the U.S.
Sen. Rob Portman (R-Ohio), who inserted the provision in the infrastructure bill, said he does not believe the language could be interpreted that broadly, but said work could be done in floor remarks on Sunday.
"We should work to clarify this ... we want to be sure miners and stakers and others, now or in the future, who play a key role by validating transactions or sellers of hardware or software for digital wallets, or node operators, or others who are not brokers, are clearly exempted," he said.
The Senate was originally set to vote on competing amendments that both looked to address this concern in different ways.
One amendment, introduced by Sens. Wyden, Cynthia Lummis (R-Wyo.) and Pat Toomey (R-Pa.) last Wednesday, sought to specify that these types of businesses are exempt from the reporting requirement, meaning only trading desks or businesses which provide similar types of services would be required to comply with the broker reporting rules.
The way the provision is currently worded, non-custodial businesses are part of the scoring, or how the Joint Committee on Taxation (JCT) evaluated the amount of revenue it could bring in. It’s possible that explicitly excluding miners, for example, could change the scoring, meaning the provision would no longer be expected to generate $28 billion. This concern was levied against the Wyden/Toomey/Lummis amendment.
Though the JCT published its overall score for the infrastructure bill, the way the JCT arrived at the $28 billion figure is currently unknown. A representative told CoinDesk that the group does not typically publish this type of methodology.
Fight for the Future, a digital rights advocacy group, launched a call-in campaign to drum up support for the Wyden/Toomey/Lummis amendment late Wednesday. A spokesperson said the general public had placed around 15,000 calls before Saturday.
Crypto businesses, lobbyist organizations and venture capital firms also pushed for the amendment in public statements and letters directed to different lawmakers.
Following the Senate vote, the infrastructure bill will move to the House of Representatives, which will not take it up before the fall.
There is bipartisan opposition to the crypto provision in the House, but it’s unclear whether the House will choose to strip out the tax provision or narrow its scope.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.