The U.S. Treasury Department in a letter sent to a group of senators on Friday signaled that crypto miners and stakers won't face tax reporting obligations that will be implemented for exchanges.
The letter addresses concerns from the crypto industry that last year’s Infrastructure Investment in Jobs Act would impose undue tax reporting burdens on entities such as crypto miners and stakers that don’t deal directly with customers by broadening the definition of a “broker.” The requirements require brokers to collect detailed information on customers and their trades.
Industry participants pointed out that miners, stakers and other parties don’t typically have access to customer information that exchanges have when they facilitate transactions. An overly broad definition might be impossible for some entities to comply with. Treasury’s letter, a copy of which was obtained by CoinDesk, suggests the expanded definition would be limited to parties that already collect this information.
“Existing regulations impose broker reporting obligations only on market participants engaged in business activities that provide them with access to information about sales of securities by taxpayers,” the letter said.
Bloomberg first reported the contents of the letter Friday.
According to the letter, which was written by Jonathan Davidson, an assistant Treasury secretary for legislative affairs, the department’s view is that “ancillary parties who cannot get access to information that is useful to the IRS (Internal Revenue Service) are not intended to be captured by the reporting requirements for brokers.”
Treasury also plans to analyze the “significant differences” between traditional securities supported by brokers and digital assets.
Davidson added that the Treasury Department plans to issue proposed regulations that reflect how it defines a broker, similar to the rulemaking process it follows for other regulations implemented by federal agencies.
That process will give the general public and industry participants a chance to comment.
In a letter last month to Treasury Secretary Janet Yellen, a group of U.S. representatives challenged the infrastructure bill's definition of "broker," saying it is incompatible with the crypto ecosystem.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.