On Friday, Congress passed the $1.2 trillion infrastructure package, sending the legislation to President Joe Biden for his signature. But while the measure makes historic investments in roads and bridges, it also maintains a controversial new cryptocurrency tax reporting requirement that the Treasury Department could apply to miners.
Biden’s Infrastructure Investment and Jobs Act requires brokers to report trader information on transactions of more than $10,000 to the IRS. The provision was added to the Senate version of the bill in late July after the Joint Committee on Taxation estimated that it would offset $28 billion of infrastructure costs over the next decade.
The Joint Committee on Taxation estimated that it would offset $28 billion of infrastructure costs
But the cryptocurrency community is more concerned about how the bill defines a “broker” more than the new tax requirements it imposes on them. Industry groups and think tanks, like the Chamber of Digital Commerce and Coin Center, have argued that the bill’s current language is “too broad and vague” and could impose these reporting requirements to miners and wallet developers, not just brokers like Coinbase.
Senators that are sympathetic to the cryptocurrency industry, like Sens. Ron Wyden (D-OR) and Cynthia Lummis (R-WY), tried to remedy the problem over the summer before the Senate passed the bill, joining with Sen. Pat Toomey (R-PA) for an amendment clarifying the role of brokers in the legislation. But the amendment was shot down when Sen. Richard Shelby (R-AL) objected to a unanimous motion to approve it in August. Shelby previously chaired the Senate Banking Committee.
Shortly after the Senate’s passage of the bill, the bipartisan Blockchain Caucus sent a letter to every House lawmaker calling on them to help fix 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 any efforts to change the language in the House, the problematic broker definition remains in the final bill.
The Treasury Department will have the sole authority to decide what entities would be considered brokers
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.”
Once Biden signs the legislation, the Treasury Department will have the sole authority to decide what entities would be considered brokers. A Treasury official previously told CNBC that it wouldn’t target miners and hardware developers, but that promise doesn’t prevent new administrations from going after them in the future.
Cryptocurrency groups are already preparing to bar the Treasury from changing its mind on miners in the future. Neeraj Agrawal, director of communication for Coin Center, said that the group would “be pursuing legislative fixes to constrain the new language more permanently” in a tweet on Monday. It’s unclear what this remedy could look like as of publication.
Aside from the cryptocurrency reporting rules, the infrastructure package includes billions of dollars to improve roads, bridges, and other physical infrastructure across the country. The measure includes $65 billion to connect every American household to high-speed broadband over the next 10 years. There’s also $7.5 billion to build over half a million EV charging stations.
At a Monday White House press conference, Transportation Secretary Pete Buttigieg said that the “bipartisan infrastructure deal will now become the law of the land” but declined to answer additional questions on when to expect Biden to sign the bill. The White House has yet to announce the timing for a future signing ceremony.
Updated 11/9/21 at 1:34PM ET: Added a statement from Sen. Cynthia Lummis (R-WY).