Because the Senate failed to adopt the bipartisan Wyden-Lummis-Toomey amendment even after it was watered down, the infrastructure package’s cryptocurrency tax reporting provisions could destroy, rather than help build, a vital part of America’s digital infrastructure.
When the bill goes to the House, lawmakers should clarify that cryptocurrency developers and creators such as miners—who do not have access to identifying information of individual crypto holders for data security reasons—should not be treated as “brokers” with tax reporting obligations for those whose cryptocurrency accounts they service.
Fortunately, there is already a bipartisan effort to do so from House Blockchain Caucus co-chairs Reps. Tom Emmer (R-MN), Bill Foster (D-IL), David Schweikert (R-AZ), and Darren Soto (D-FL). They note in their letter to colleagues (as I did in my Forbes column last week) that the definition of “broker” for cryptocurrency in the infrastructure bill vastly exceeds the one for brokers of other financial services that has long been written into tax law.
Grassroots efforts from state and local groups, as well as notables from rock star Gene Simmons to tycoon Mark Cuban, pushing Congress to modify the problematic provisions show that cryptocurrency and blockchain entrepreneurs are a vital part of the nation’s economy. Congress and regulators should heed this call for crypto respect and strive to foster an atmosphere of permissionless innovations in policies affecting this sector.