US Lawmakers Kick Back Crypto Policies in Infrastructure Bill

US Lawmakers Kick Back Crypto Policies in Infrastructure Bill

Changes to tax reporting procedures for crypto brokers and transactions above $10,000 in the recently enacted Infrastructure Bill are being fought by lawmakers on both sides of the aisle. Ten Democratic members of Congress, led by Florida Rep. Darren Soto, have advocated for changes to the definition of a broker in the infrastructure package that was signed into law on November 15.

Soto, alongside Reps. Ro Khanna, Stacey E. Plaskett, Eric Swalwell, Tim Ryan, Susan Wild, amongst others put out a call pushing for changes to section 6045(c)(1) of the tax code as part of the Bipartisan Infrastructure Framework (BIF).

Analysts have cautioned that under the controversial new law, miners, validators, and wallet developers might be classified as brokers for tax purposes. The letter asks House Speaker Nancy Pelosi to exempt this organization because it does not provide brokerage services.

In the letter, Soto stated, “We remain united in our efforts to create greater tax stability for cryptocurrency and to collaborate with the IRS on critical improvements and shall continue to work together to foster innovation and safeguard consumers”.

Addressing concerns over negative market impacts and how the United States will maintain its rate of technological innovation if the regulations continue to persist, Soto said “In its present draft, the BIF will heighten the bitcoin sector uncertainty, determine winners and losers, and impede IRS efforts to appropriately tax cryptocurrencies, all while removing our country’s competitive advantage in the digital asset marketplace.”

Senators are also pushing for changes to the BIF’s tax reporting rules. According to Bloomberg, Democrat Senator Ron Wyden and Republican Senator Cynthia Lumis have proposed a bill that “protects American innovation,” “ensures Americans pay their fair share of taxes,” and “does not apply to those inventing blockchain technology and wallets.”

Senator Ted Cruz of Texas, a Republican, filed legislation to change the tax law, saying the new reporting requirements are a “devastating assault” on the Bitcoin business. Sharing the same concerns with Democratic House Representatives’, that the current provision will hinder American invention and “jeopardize the privacy of countless Americans.”

Senators are now just beginning to gain a better understanding of how the bitcoin business functions as a whole. The Joint Economic Committee of the United States Congress convened a hearing titled “Demystifying Crypto: Digital Assets and the Role of Government.” They examined the sophisticated tax entities that should regulate centralized exchanges at this session, and they concluded that privacy and security are the most pressing concerns.

The Author

Oladotun Olayemi

Dotun is a financial enthusiast who specializes in first-in-class financial content, including crypto, blockchain, market, and business, to educate and inform readers.