IRS, in Boon to Crypto, Will Reportedly Ignore How Bill Defines Broker; Bitcoin Rises
Citing an unnamed official, Bloomberg said Treasury won’t go after crypto firms that don’t meet the tax code’s definitions of a “broker.”
The U.S. Treasury Department is preparing to offer an olive branch to crypto developers, miners and hardware firms spooked by the bipartisan infrastructure bill's tax reporting requirements, according to a Bloomberg News report.
The price of bitcoin, already up on the day, jumped more than $1,500 on the news, hitting a three-month high of over $47,700. In recent trading the price of the leading cryptocurrency was at $47,600, up 8% over the last 24 hours.
Citing an unnamed department official, Bloomberg said Friday that Treasury won’t go after crypto entities that don’t meet the tax code’s definitions of a “broker.” Guidance on the matter could come next week, the report said.
The guidance would attempt to soothe the crypto industry’s biggest fear: that the Senate’s slapdash effort to tax “any service effectuating transfers of digital assets on behalf of other persons” could blow the nascent industry to smithereens.
Critics have called the infrastructure bill’s crypto provision overbroad and lobbied for weeks in a fruitless attempt to narrow it down. Many in the industry claimed that developers and miners who meet the bill’s definition of a broker would be forced to provide reporting information they do not have the ability to collect.
The Treasury statement, which is not yet public, could provide a workaround by effectively limiting the bill’s scope to those classified as brokers under the tax code. But it is not entirely clear how that carve-out would combat the concerns of the bill’s staunchest opponents.
According to Cornell Law, the U.S. tax code defines a broker as:
Treasury is reportedly planning to exempt non-broker parties on a case-by-case basis, a far cry from the more sweeping exemptions the industry had sought.
A department spokesperson did not reply to a request for comment.
UPDATE (Aug. 13, 22:48 UTC): Adds bitcoin price reaction.
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