Cryptocurrency reporting requirement in infrastructure bill sees potential changes
U.S. lawmakers are moving forward with a revised version of an idea that aims to gather data about cryptocurrency transactions in a way meant to curb tax cheats.
Senate Finance Committee Chair Ron Wyden, D-Ore., joined by colleagues Sens. Cynthia Lummis, R-Wyo., and Pat Toomey, R-Pa., have filed an amendment seeking to put to rest some of the cryptocurrency industry’s concerns about a sweeping new $1 trillion infrastructure package Congress is set to vote on this week.
The amendment alters current language in the infrastructure bill that enforces requirements for “brokers” to report cryptocurrency that is bought, sold, and traded. The idea comes as U.S. officials are exploring regulations that might shed light on ransomware payments made through the technology. U.S. Securities and Exchange Commission chairman Gary Gensler on Tuesday also called on Congress for additional authorities to undertake regulatory efforts.
“Our amendment makes clear that reporting does not apply to individuals developing block chain technology and wallets,” Wyden wrote in a statement. “This will protect American innovation while at the same time ensuring those who buy and sell cryptocurrency pay the taxes they already owe.”
The provision of the more than 2,000-page piece of legislation is aimed at making sure that cryptocurrency owners can’t dodge paying taxes.
Industry critics, alongside lawmakers and privacy experts, have criticized the current language as being too broad. The current definition of broker could extend to companies that are only intermediaries for cryptocurrency, such as software makers, miners, and decentralized exchanges. Those companies don’t currently collect the troves of personal customers needed to meet IRS reporting requirements.
Starting to do so creates new surveillance risks, some privacy experts have argued.
“The mandate to collect names, addresses, and transactions of customers means almost every company even tangentially related to cryptocurrency may suddenly be forced to surveil their users,” Rainey Reitman, chief program officer at the Electronic Frontier Foundation, wrote.
The amendment restricts individuals required to report to individuals that conduct transactions on exchanges where consumers buy, sell and trade digital assets. It excludes information reporting from persons who engage in mining, individuals who develop hardware or software that is used to access and control the currency, and individuals who develop assets but do not maintain customers.
A coalition of cryptocurrency companies and trade groups including Coinbase, Square and the Coin Center released a statement in support of the amendment.
“The development of crypto, and financial innovation generally, has enormous potential for the American economy and the American people…It should not be subject to potentially devastating legislation without public participation and public comment,” the groups wrote in a statement. “We support sensible reporting requirements that are consistent with those that apply to traditional financial services.”
EFF’s Reitman also expressed support.
“We think this amendment will help to address some of the more significant problems with the bill, and we urge Congress to adopt it,” Reitman wrote in an email. “Nonetheless, we wish that the infrastructure bill was not attempting to address as complex and nuanced an issue as reporting requirements around cryptocurrency — which we believe needs a more thorough and rigorous debate than this process has allowed.”
The exact timing for a vote on the amendment is unclear, according to Wyden’s spokesperson.
Updated 8/4/2021: This article was updated to include a statement from Reitman.
