Senators clarified a provision in the Infrastructure Investment and Jobs Act that would have severely tightened cryptocurrency regulations — a move that had drawn the ire of lawmakers, entrepreneurs, and others concerned about the statute’s effects on the emerging sector.
As The Daily Wire reported last week, a provision of the 2,700-page, $1.2 trillion package would have amended the Internal Revenue Code by introducing a “return requirement for certain transfers of digital assets not otherwise subject to reporting.” The clause defined “digital asset” as “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology.”
The new amendment — drafted on Monday by Sen. Pat Toomey (R-PA) and Sen. Cynthia Loomis (R-WY), and co-sponsored by Sen. Mark Warner (D-VA), and Sen. Rob Portman (R-OH) — would change the definition of “broker” so that software developers and transaction validators would not be subject to the new requirements.
A statement from the lawmakers explains:
There’s broad agreement that digital asset exchanges behaving as brokers should be required to report transactions just like other kinds of brokers already do. There is also concern that tax evasion and non-compliance are becoming significant issues surrounding cryptocurrencies and digital assets. Some have expressed confusion concerning the underlying text of the infrastructure bill, suggesting it would result in the application of reporting requirements far too broadly and ensnare individuals, developers, and other elements of this ecosystem that could not comply with a reporting mandate.
While we each would have drafted this solution differently, we all agree it’s important to ensure that these obligations are properly crafted to apply only to entities that are regularly effectuating transactions of digital assets in exchange for consideration.
Many were initially worried that the provision would have quashed the use of cryptocurrencies — such as bitcoin, ethereum, and dogecoin — in the United States.
“There are a few key moments that define our future,” Coinbase CEO Brian Armstrong remarked on Twitter. “One is happening now in the Senate w/ the infrastructure bill. At the 11th hour @MarkWarner has proposed an amendment that would decide which foundational technologies are OK and which are not in crypto. This is disastrous.”
1/ There are a few key moments that define our future. One is happening now in the Senate w/ the infrastructure bill. At the 11th hour @MarkWarner has proposed an amendment that would decide which foundational technologies are OK and which are not in crypto. This is disastrous.
— Brian Armstrong (@brian_armstrong) August 6, 2021
“If the U.S. fails to embrace the innovation happening in crypto, it risks becoming a financial backwater, missing out on one of the fastest-growing sectors of the economy,” he argued. “Imagine if we had missed out on the internet, and the largest internet companies had been built overseas.”
“This debate in the Senate started because the govt sees the growing crypto industry as a source of tax revenue. We agree everyone must pay their taxes. There is no debate on this topic. But destroying some of the most exciting innovations in the process is unconscionable.”
“The Senate is on the verge of passing legislation that would be TERRIBLE for cryptocurrency,” added Sen. Ted Cruz (R-TX).
🚨🚨The Senate is on the verge of passing legislation that would be TERRIBLE for cryptocurrency.🚨🚨
The infrastructure deal contains DANGEROUS provisions that would devastate crypto and blockchain innovation.
Supporters of crypto need to make their voices heard. https://t.co/iXrcnne0tV
— Ted Cruz (@tedcruz) August 7, 2021
“The infrastructure deal contains DANGEROUS provisions that would devastate crypto and blockchain innovation. Supporters of crypto need to make their voices heard.”
The Biden administration supported the original text of the provision, claiming that it would “strengthen tax compliance in this emerging area of finance and ensure that high-income taxpayers are contributing what they owe under the law.”
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