Treasury: New Rules for Brokers Only
Crypto News

Treasury: New Rules for Brokers Only

2 Minuten
1 year ago

Only crypto brokers will need to comply with $1T infrastructure bill’s IRS reporting requirements.

Treasury: New Rules for Brokers Only

Inhaltsverzeichnis

The U.S. Treasury Department is planning to inform cryptocurrency companies concerned about broker reporting requirements in the $1 trillion infrastructure bill that it will not apply the rules too broadly. 

The bipartisan bill included provisions intended to raise $28 billion from the cryptocurrency industry. It passed on August 10 without widely sought changes after a single senator objected to compromise language.

Under the legislation as written, the definition of “brokers” facing reporting requirements was so broad that it would likely encompass cryptocurrency miners, proof-of-stake transaction validators, node operators and even software developers.

The industry called these provisions “unworkable,” noting that many of those non-broker “brokers” would not be able to comply — effectively pushing cryptocurrency mining out of the United States.

An August 13 Bloomberg report said the Treasury is seeking to quell these fears by clarifying that “only cryptocurrency companies it considers brokers will need to comply with proposed IRS reporting requirements.”

This doesn’t mean that the IRS will rely on how firms classify themselves, the report added. Instead, the IRS will look at whether firms’ actual activities genuinely classify them as a broker under the tax code.

The clarification is expected as soon as next week, Bloomberg said. 

‘Unworkable’ Reporting Requirements

Senator Pat Toomey (R-Pa.) had said that as originally written, the “legislation imposes a badly flawed, and in some cases unworkable, cryptocurrency tax reporting mandate that threatens future technological innovation.”

He was part of a bipartisan group of senators that worked out a compromise to amend the bill that would have restricted the reporting requirements to only the actual intermediaries — real brokers.

By “clarifying the definition of broker, our amendment will ensure non-financial intermediaries like miners, network validators, and other service providers are not subject to the reporting requirements specified in the bipartisan infrastructure package,” Sen. Toomey has said on Twitter.

But the last-minute amendment failed after a single senator, Alabama Republican Richard Shelby, objected — despite later saying that he actually supported the compromise. 

Still, even the losing fight allowed the industry to flex its political muscles in a way that caused Washington to wake up “to crypto influence,” according to Politico. 

 Politico judged that the outcome is “Washington wakes up to crypto influence amid infrastructure fight,” adding that the “industry was caught off guard when the Senate targeted it with new tax rules. But it fought back with a vengeance.”

15 people liked this article