Congress passed the $1.2 trillion infrastructure bill on Friday, sending it to President Joe Biden for signature. However, while the bill makes historic investments in roads and bridges, it also keeps in place a contentious new cryptocurrency tax reporting requirement that the Treasury Department could impose on miners.
According to Biden’s Infrastructure Investment and Jobs Act, brokers must provide trader information to the IRS on transactions worth more than $10,000. After the Joint Committee on Taxation calculated that it would offset $28 billion in infrastructure spending over the next decade, the provision was introduced to the Senate version of the bill in late July.
The cryptocurrency community, on the other hand, is more concerned with how the bill defines a “broker” than with the increased tax duties it imposes on them. Industry groups and think tanks, such as the Chamber of Digital Commerce and Coin Center, have claimed that the bill’s present language is “too wide and imprecise,” and that these reporting obligations might be imposed on miners and wallet developers as well as brokers like Coinbase.
Senators sympathetic to the cryptocurrency industry, such as Sens. Ron Wyden (D-OR) and Cynthia Lummis (R-WY), attempted to address the issue over the summer before the Senate passed the bill, joining Sen. Pat Toomey (R-PA) in proposing an amendment clarifying the role of brokers in the legislation. However, the amendment was defeated in August when Sen. Richard Shelby (R-AL) objected to a unanimous motion to accept it. Shelby formerly served as Chairman of the Senate Banking Committee.
The nonpartisan Blockchain Caucus issued a letter to every House legislator shortly after the Senate passed the bill, urging them to help address the “crypto pay-for.”
“Cryptocurrency tax reporting is important, but it must be done correctly,” the lawmakers wrote in the August letter. “When the Infrastructure Investment and Jobs Act comes to the House, we must prioritize amending this language to clearly exempt noncustodial blockchain intermediaries and ensure that civil liberties are protected.”
Despite efforts in the House to modify the text, the problematic broker definition remains in the final measure.
In a statement to The Verge on Tuesday, Lummis said that she was working on a permanent legislative solution. “The digital asset broker language in the infrastructure bill was problematic from the start,” Lummis said. “I’m disappointed that the House wasn’t able to rectify this language in their version of the infrastructure bill, and I’m working on new legislation to make sure there is a fix to this.”
After Biden approves the bill, the Treasury Department will have sole authority to choose which firms would be considered brokers. A Treasury official previously told CNBC that the government would not target miners and hardware developers, but it doesn’t mean that future administrations won’t go after them.
Cryptocurrency organisations are already planning to prevent the Treasury from altering its mind about miners in the future. In a tweet on Monday, Coin Center’s head of communication, Neeraj Agrawal, stated that the organisation would “be pursuing legislative fixes to confine the new language more permanently.” As of publication, it is unknown what this treatment would include.
Aside from bitcoin reporting laws, the infrastructure package includes billions of dollars in funding to improve roads, bridges, and other physical infrastructure across the country. The package contains $65 billion in funding to link every American household to high-speed broadband over the next decade. There is also $7.5 billion set up to develop over 500,000 EV charging stations.
During a news conference at the White House on Monday, Transportation Secretary Pete Buttigieg stated that the “bipartisan infrastructure deal will now become the law of the land,” but he declined to address further questions about when Biden is expected to sign the bill. The time of a future signing ceremony has yet to be announced by the White House.