According to CoinDesk, an updated draft of the U.S. Senate’s bipartisan infrastructure bill narrows a key definition for who must report crypto transactions to the IRS. The initial language stated “…any person who (for consideration) regularly provides any service or application (even if noncustodial) to facilitate transfers of digital assets, including any decentralized exchange or peer-to-peer marketplace”.
WASHINGTON, DC – JULY 28: U.S. Sen. Rob Portman (R-OH) (L) and Sen. Kyrsten Sinema (D-AZ) (R) … [+]
Outside of the surprising insertion of this type of measure into a ‘must-pass’ bill, after years of discussion and careful deliberations by the crypto trade associations and think tanks in D.C. with allies in the House and Senate, it seems like a narrow victory that the language is even still part of the infrastructure package without any Congressional hearings or debate with the quickly maturing crypto industry. However, the new language does not specify that ‘decentralized exchanges’ are to be included in this reporting requirement. Additionally, the wording is such that it does not specifically exclude bitcoin miners, hardware manufacturers and software developers.
Jerry Brito, the Executive Director of Coin Center who just finished testifying earlier last week at a Senate hearing on cryptocurrencies, tweeted the new language in the bill as a contrast to what was originally in the text. The new language was revised to state. “…any person (who) for consideration is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” Brito indicated that while this is better than what was originally in the bill, it was, “…still not good enough to clearly exclude miners and similarly situated persons.”
Jerry Brito, Executive Director of Coin Center, listing the key changes in the controversial crypto … [+]
Brito also pointed out the way the cryptocurrency industry has been collaborating and working together to help avoid bad legislation that may have swept participants into the need to provide onerous tax reporting requirements, even without having a customer. The Blockchain Association has been tweeting updates as well, with Kristin Smith the Executive Director of the Blockchain Association noting this was, ‘not a drill’ earlier this week to let the cryptocurrency and blockchain industry aware of the dangers involved in how the bill language was written and who could be impacted.
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Kristin Smith shares the letter written by the Blockchain Association to Congress on the crypto … [+]
Ultimately, the infrastructure bill, considered to be a key achievement and ‘must-pass’ for the Biden Administration, will continue to move ahead at full steam; however, the way the crypto industry has quickly organized itself shows signs of maturity and helps provide a bit of a cautionary tale to policymakers that, although a nascent industry, it is a must to consult with the industry representatives on policymaking.
This ‘surprise’ language in the infrastructure bill, and the manner in which the advocates for the industry came together, should be viewed as a victory for crypto that the industry has been able to come together and influence what was written in the bill.
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Author: Jason Brett, Contributor