• The US Infrastructure Bill has been updated, and the requirement for crypto reporting has been reduced

  • An updated version of the United States Senate’s bipartisan infrastructure bill narrows the definition of “broker” for the purposes of crypto tax collection but does not specify that only companies that provide services to customers qualify.

    The bill, which is currently being debated in the Senate, would fund around $1 trillion in infrastructure improvements across the country, with about $28 billion in taxes generated from cryptocurrency transactions helping to pay for some of it. An earlier version of the bill attempted to accomplish this by increasing information reporting requirements and broadening the definition of a “broker” for tax purposes to include any party that may interact with cryptocurrencies, such as decentralized exchanges or other non-custodial services providers.

    According to a copy of the draft bill obtained by us, an updated version of the bill now specifies that only people who provide digital asset transfers would be considered brokers. In other words, while the language no longer explicitly includes decentralized exchanges, it also no longer explicitly excludes miners, node operators, software developers, and other similar parties.

    According to the bill, “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person” is now included in the definition.

    The requirements for information reporting are at the heart of the problem. The initial version of the infrastructure bill did not propose new taxes on cryptocurrency transactions but rather increased the type of reporting that exchanges and other market participants were required to provide around transactions.

    This means that the bill would apply existing tax rules to a broader range of transactions. Because there are no clear operators who can provide this type of reporting, it may be difficult for some types of exchanges – specifically, decentralized exchanges – to comply.

    Other parties, such as software developers, hardware manufacturers, or miners who do not send transactions directly to customers, may have been caught up in these rules under the previous language of the infrastructure bill. However, Sen. Rob Portman (R-Ohio), one of the lawmakers working on the bipartisan bill and possibly the author of the language, does not intend to include these types of entities. According to a spokesperson, “non-brokers” will not be required to comply with reporting requirements.

    “This legislative language does not define digital assets or cryptocurrency as a ‘security for tax purposes, infringe on the privacy of individual crypto holders, or compel non-brokers, such as software developers and cryptocurrency miners, to comply with IRS reporting obligations. “It simply clarifies that any person or entity acting as a broker by facilitating trades for clients and receiving cash must comply with a standard information reporting obligation,” said Drew Nirenberg.

    When asked if the senator intended for this statement to be published in the Congressional record, another spokesperson said it was only for press purposes.

    Clarifying intent in the legislative history is one way Portman and other lawmakers could specify that DEXs, miners, and other similar groups would not be considered brokers. Now that the bill has been introduced, other Senators can offer amendments to change or remove the provision.

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