The U.S. Senate is facing backlash from the cryptocurrency industry over a portion of the Infrastructure bill that would require crypto brokers to report customer information to the Internal Revenue Service (IRS), CNBC reported.
The bill broadens the definition of a “broker” to include anyone who is “responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” The definition does not exclude miners, software developers, stakers and other individuals in the crypto economy who don’t have customers.
The language does not effect centralized exchanges like Coinbase, or other public companies where consumers can buy cryptocurrencies like Robinhood, Square, and PayPal. These companies have clearly identified customers and work with them on reporting requirements due to the IRS.
Politico reported that a bipartisan group of lawmakers want to narrow down who would be subject to new tax reporting requirements that are intended to improve tax compliance among those trading digital currencies. There is an amendment that is supported by one Democrat and two Republicans Senators, all of whom are on the Senate Finance Committee.
The Blockchain Association posted what amounts to an open letter titled: “More Than 100 Crypto Ecosystem Stakeholders Support Wyden-Lummis-Toomey Amendment in Infrastructure Bill”. Those who signed this open letter support the bipartisan amendment. From the letter:
“The Wyden-Lummis-Toomey Amendment addresses significant concern raised by the bill as currently drafted by removing the obligation to report from those participants who don’t have – and shouldn’t have – access to customer information. It does so without affecting the reporting obligations placed on brokers and traders of digital assets”.
According to Politico, the Biden administration feels that the cryptocurrency industry is “using scare tactics to water down the requirements” in the bill. CNBC reported including the requirement for crypto companies to report customer information to the IRS is part of how the Infrastructure bill will be paid for.