US senators reach last-minute compromise on cryptocurrency regulations as infrastructure bill vote looms
Coin miners and digicash researchers could be in the clear
US Senators have reached an agreement to amend the definition of who counts as a digital asset “broker” in the bipartisan infrastructure bill, a change that makes sure cryptocurrency miners and engineers are exempt from the proposed regulations.
In an attempt to pay for the trillion-dollar bill [PDF], Congress is introducing rules that will make it more difficult for crypto investors to evade paying taxes whenever they buy or sell digital cash like Bitcoin or Ethereum.
Brokers – people who manage the transactions that allow traders to buy, sell, or exchange cryptocurrencies – will have to collect the personal information of the payers and payees involved in the financial settlement. That data can then be reported to America’s tax agency, the Internal Revenue Service.
Two different groups of senators, however, have been squabbling over the final wording of the bill that defines who is a broker or not.
Senators Ron Wyden (D-OR), Pat Toomey (R-PA), and Cynthia Lummis (R-WY) want to make sure brokers are restricted pretty much to cryptocurrency exchanges. People mining crypto, software developers processing blockchain transactions, or hardware vendors selling the mining kit shouldn't be required to collect customer data, they said. But Senators Mark Warner (D-VA), Kyrsten Sinema (D-AZ) and Rob Portman (R-OH) are in favor of a broader and looser definition who should be classified as a broker.
- US proposes tracking digital cash and taxing it to pay for, you know, roads and stuff
- US SEC chair calls for crypto regulation
- Private cryptocurrencies make lousy national currencies: International Monetary Fund
- Reserve Bank of India official suggests country may soon have a digital currency pilot
Both camps, however, said they have reached an agreement to finalize the changes of the bill. “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,” they said in a joint statement.
“We’ve worked with the Treasury Department to clarify the underlying text and ensure that those who are not acting as brokers will not be subject to the bill’s reporting requirements.”
“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. To best memorialize this common understanding, we propose to incorporate this important amendment into the infrastructure bill and urge our colleagues to join us in enacting this bipartisan clarification.”
The Treasury Secretary expressed support for the compromise. “I am grateful to Senators Warner, Portman, Sinema, Toomey and Lummis for working together on this amendment to provide clarity on important provisions in the bipartisan infrastructure deal that will make meaningful progress on tax evasion in the cryptocurrency market," she said.
"I am also thankful to Chair Wyden for his leadership and engagement on these important issues.”
The exact wording of the amendments made to the bill have not been made public as of yet, however and senators were still voting on the changes at the time of writing. The final vote on the full bill is scheduled for Tuesday. ®
Updated to add
The $1tr infrastructure bill has passed its Senate vote by 60-33, but the new terminology for cryptocurrency miners and researchers didn't make it into the final legislation.
As so often happens in the Senate these days the bi-partisan amendment was blocked. Unanimous consent for the amendment was required and Senator Richard Shelby (R-AL) objected, effectively killing the changes that had taken weeks of careful negotiating.
It's now up to the House of Representatives to come up with its own version of the language in its bill, so it's not over yet.