A bipartisan trio of senators is trying to change a cryptocurrency provision in the legislation which the industry warns will have a devastating impact on the space. As it stands, the infrastructure bill aims to increase revenue by banning crypto tax reporting.
The industry says the current measure included in the bill is too broad — and would force miners, developers and other non-financial intermediaries to face the new reporting requirements, though they would not be able to comply.
They're counting people who don't have any information about the buyers and sellers of digital assets. Miners seldom know the ultimate customer. People who write software and hardware for personal wallets rarely know the ultimate customer, said Sen. Cynthia Lummis in an interview with Yahoo Finance. What that indicates to me is there’s not only a lack of understanding, but there is an actual misunderstanding about some people's roles in digital assets.
Lummis collaborated with Senate Finance Committee Chairman Ron Wyden and Sen. Pat Toomey to introduce an amendment that would clarify who is considered broker and thus subject to new reporting requirements. The Senate could start accepting the amendment as soon as Thursday, though it's not clear if it will be approved.
'Our amendment makes clear that reporting does not apply to individuals developing blockchain technology and wallets. This would protect American innovation while at the same time ensuring people who buy and sell cryptocurrency pay tax they already owe, Wyden said in a statement.
Industry advocates, like Chamber of Digital Commerce President Perianne Boring, insist that the need for a clarifying amendment stems less from a position of reducing the tax burden on the crypto sector and instead from an impossibility for some companies to comply with a lack of data. That impossibility, could result in crypto businesses, like miners and node operators. Leave the U.S. to set up shop elsewhere in the US.
This Week, Bringing clarity to these requirements is good for business, Boring explained to Yahoo Finance this week. What is not good is to extend those requirements to people who have no way to comply with this.
The Joint Committee on Taxation estimates the original provision could bring in $28 billion in revenue for the $550 billion infrastructure plan, but two people familiar with the committee estimates told Yahoo Finance that the amendment reduces the revenue estimate by more than $5 billion.
Despite the industry backlash, the Biden administration backs the original measure, which the bipartisan group of senators agreed to during negotiations.
Stopping tax evasion is a priority for this administration and this change would help apply similar reporting to cryptocurrency as exists for other financial assets. This is about making sure that people, many of whom have very high income, are paying what they owe under the law when using cryptocurrency. We are encouraged to see it included in the bill and to see recognition of the substantial revenue raising potential of compliance efforts, said a White House official.
Lummis — the lead Republican negotiator of the infrastructure bill — argued the current proposal doesn't do what Rob Portman and crypto industry say it does.
The legislation does not impose new reporting requirements for software developers, crypto miners, node operators or other non-brokers, said Portman in a tweet earlier this week. It merely says that brokers must comply with standard information reporting obligations.
Portman's office reached out to Yahoo Finance about the amendment, but did not receive a response.
Lummis told Yahoo Finance a lack of understanding in Washington has made tackling the problem tricky. She said she and Wyden are trying to put together a tutorial for senators to help them understand the issue.
I'm worried that the U.S. Treasury Department doesn't get it and they seem to be advocating to use this broader language in the definition of "broker" Lummis said.
Lummis — who sells Bitcoin — told Yahoo Finance she doesn't think she has a conflict of interest while crafting bitcoin legislation.
I am also a rancher. I own cows. People don't care about me defending ranching and for livestock grazing. To me, they're somewhat analogous to me, she said. I don't believe I have a conflict, I own other assets that I have also disclosed.
I think it gives me an advantage to have a little skin in game added, she added.
Lummis said that she is still not certain whether she will support the broader infrastructure bill, even if her amendment is included in it.
There are still some important issues that I'm very concerned about in the bill, said Lummis. If I had to vote now, would I vote yes?