US Lawmakers Move to Clarify Definition of 'Brokers' in 2021 Infrastructure Law
The bill would exclude miners, stakers and other parties who may not have the tax reporting information needed to otherwise comply.
A bipartisan group of U.S. lawmakers wants to ensure that the definition of a crypto "broker" for tax reporting purposes is not too broad.
Supported by Senators Pat Toomey (R-Pa.), Mark Warner (D-Va.), Cynthia Lummis (R-Wyo.), Kyrsten Sinema (D-Ariz.) and Rob Portman (R-Ohio), the bill would exclude miners or other node operators and wallet manufacturers from the definition of a "broker" in a 2021 infrastructure law that imposed new tax reporting requirements on those facilitating crypto transactions.
According to a press release, the bill is identical to a proposed amendment that the group submitted last year, when the Infrastructure Investment and Jobs Act was being considered by the Senate.
The law proposed enforcing stricter tax reporting requirements on brokers facilitating crypto transactions. However, lawmakers and crypto industry advocates alike warned that the language might be overly broad, and could inadvertently enforce these same requirements on individuals, miners and wallet manufacturers who would not be able to record or report the kind of information that brokers could.
"Nothing in this section or the amendments made by this section shall be construed to create any inference that a person described ... includes any person solely engaged in the business of (A) validating distributed ledger transactions, without providing other functions or services, or (B) selling hardware or software for which the sole function is to permit persons to control private keys which are used for accessing digital assets on a distributed ledger," the text of the new bill said.
The U.S. Senate did not vote on the then Wyden-Toomey-Lummis amendment. The lawmakers instead sought unanimous consent to approve the amendment, as Senate Majority Leader Chuck Schumer (D-N.Y.) had closed the ordinary process to hasten the overall bill's passage. However, Sen. Richard Shelby (R-Ala.) blocked unanimous consent over an unrelated military spending amendment.
The Treasury Department has signaled that miners may already be excluded from the tax reporting requirements. In a letter sent to multiple lawmakers, the department said the reporting requirements would only apply to parties that already have access to the transaction information that would need to be reported.
CORRECTION (Aug. 3, 2022, 20:15 UTC): Corrects that the same group of lawmakers introduced the bill as an amendment in 2021.
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. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.
Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.