Senators aim to clarify cryptocurrency reporting requirements with amendment to infrastructure bill
Amendment aims to clarify that Bitcoin miners, other market participants, aren't brokers
A trio of senators on Wednesday introduced an amendment to the bipartisan infrastructure bill that would rewrite part of a section, setting up reporting requirements for cryptocurrency transactions.
Sens. Cynthia Lummis, Pat Toomey and Ron Wyden started working on an amendment after pointing to "unworkable" and "overly broad" language which they say would implement "broker" reporting requirements on people who are not really brokers.
These people, like the bitcoin miners who confirm transactions in the system, would not even be capable of satisfying the requirements in the bill, Toomey, R-Pa., said.
"Digital assets are here to stay. While much more work needs to be done, this amendment is a responsible step toward fully incorporating digital assets into the U.S. financial sector," Lummis, R-Wyo., said in a statement. "The digital asset and financial technology space is incredibly complicated, and we have spent long hours working in the Senate, with industry stakeholders, and with the Administration to find a way to effectively integrate digital assets into our tax code without harming the technology or stifling innovation."
INFRASTRUCTURE BILL'S UNUSUAL PROVISIONS: DRUNK DRIVING TECH MANDATE TO ‘POLLINATOR-FRIENDLY’ ROADS
The new amendment published Wednesday spells out specific exceptions to the new requirements for people who are "validating distributed ledger transactions… selling hardware or software for which the sole function is to permit a person to control private keys which are used for accessing digital assets on a distributed ledger… and developing digital assets for their corresponding protocols for use by other persons provided such persons are not customers of the person developing such assets."
According to a Senate aide, what that means in plain English is that the amendment clarifies the "bill does not require digital asset miners, and the creators of software and hardware used to self-custody digital assets, to report to the IRS. It also clarifies that developers of digital asset code are not required to report as well."
The aide said that clarification is important to avoid stunting innovation while still ensuring that those who do trade cryptocurrency have more clarity on their tax liability.
Sen. Rob Portman, R-Ohio, the chief Republican negotiator on the infrastructure bill, has defended the original version as not doing what Wyden, D-Ore., Lummis and Toomey – as well tech-world folks like Square and Twitter CEO Jack Dorsey – say it will.
SCHUMER THREATENS WITHHOLDING AUGUST RECESS UNTIL INFRASTRUCTURE BILLS ARE FINALIZED
The bill, Portman said Tuesday, "standardizes information reporting by crypto-brokers to the IRS for tax purposes – the same way it’s done for stock trades. This will make it easier for folks to determine & pay their tax bill."
"The legislation does not impose new reporting requirements on software developers, crypto miners, node operators or other non-brokers," Portman added. "It simply says that brokers must comply with standard information reporting obligations. Which many already do!"
GET FOX BUSINESS ON THE GO BY CLICKING HERE
"The legislation simply clarifies that any person or entity acting as a broker — including crypto exchanges — must comply with IRS reporting requirements," Portman spokesperson Drew Nirenberg told FOX Business. "This is a standard practice identical to the well-established, universally accepted tax reporting rules for stock and commodity trades."
It's unclear whether Portman would support the amendment by Lummis, Wyden and Toomey, which was praised by Dorsey and other cryptocurrency companies like Coinbase.
Senators will continue voting on amendments to the infrastructure bill Wednesday as Senate leaders target a procedural vote for later this week and a vote on passage sometime next week.