Six senators urge Treasury Secretary to clarify definition of broker in infrastructure law before 2022

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A bipar­ti­san group of U.S. sen­a­tors have called on Trea­sury Sec­re­tary Janet Yellen to clar­i­fy the lan­guage in the infra­struc­ture bill signed into law by Pres­i­dent Joe Biden around the tax report­ing require­ments on crypto.

In a Tues­day let­ter, Sen­a­tors Rob Port­man, Mike Crapo, Pat Toomey, Mark Warn­er, Kyrsten Sine­ma, and Cyn­thia Lum­mis urged Yellen to “pro­vide infor­ma­tion or infor­mal guid­ance” on the def­i­n­i­tion of “bro­ker” in the recent­ly passed infra­struc­ture law, HR 3684. Under the cur­rent word­ing, peo­ple in the cryp­to space includ­ing min­ers, soft­ware devel­op­ers, trans­ac­tion val­ida­tors and node oper­a­tors are required to report most dig­i­tal asset trans­ac­tions worth more than $10,000 to the Inter­nal Rev­enue Ser­vice, or IRS.

How­ev­er, accord­ing to the U.S. law­mak­ers, the law con­tains an “over­ly-broad inter­pre­ta­tion” of what a bro­ker is and places an undue bur­den on cer­tain indi­vid­u­als who may not have the nec­es­sary infor­ma­tion on trans­ac­tions to com­ply. The six said Yellen is empow­ered to use the Admin­is­tra­tive Pro­ce­dure Act, leg­is­la­tion which deter­mines how fed­er­al agen­cies may devel­op and issue reg­u­la­tions. In this case, they urged her to pro­vide a set of rules clar­i­fy­ing the def­i­n­i­tion of a bro­ker “in an expe­di­tious man­ner,” or no lat­er than the end of the year. 

“We ask that you care­ful­ly con­sid­er the char­ac­ter­is­tics of the tech­nolo­gies which dri­ve this space, which may include dif­fer­ences in the con­sen­sus mech­a­nisms of var­i­ous dis­trib­uted ledgers and sec­ond lay­er pro­to­cols,” said the six sen­a­tors. “Dig­i­tal assets could be impact­ful tech­no­log­i­cal devel­op­ments in cer­tain sec­tors, and clear guide­lines on tax report­ing require­ments will be impor­tant to those in this ecosystem.”

Relat­ed: US law­mak­ers intro­duce bill to ‘fix’ cryp­to report­ing require­ment from infra­struc­ture law

The let­ter is the lat­est effort by U.S. law­mak­ers to attempt to mod­i­fy the tax report­ing pro­vi­sion in the infra­struc­ture leg­is­la­tion. Toomey, Lum­mis, Sine­ma, Port­man, Warn­er, and oth­ers backed a bipar­ti­san agree­ment on an amend­ment to do just that when the bill was mov­ing through the Sen­ate in August, but the pro­pos­al was derailed by Alaba­ma Sen­a­tor Richard Shel­by seek­ing to add his own amend­ment to the bill. Sen­a­tors Ron Wyden and Lum­mis also attempt­ed to pass leg­is­la­tion which would have changed the tax report­ing require­ments to “not apply to indi­vid­u­als devel­op­ing blockchain tech­nol­o­gy and wal­lets” on the same day the bill became law.

“Now that this bill has become law, Con­gress has a respon­si­bil­i­ty to ensure that it is imple­ment­ed effec­tive­ly and in accor­dance with con­gres­sion­al intent,” said the six senators. 

Port­man, Crapo, Toomey, Warn­er, Sine­ma, and Lum­mis added they were “pre­pared to offer leg­is­la­tion” to clar­i­fy the def­i­n­i­tion of a broker.

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