The US House of Representatives and Senate have approved the $1.2T bipartisan infrastructure bill that broadens the definition of “broker” to include custodial BTC (bitcoin) firms such as Coinbase. If the new infrastructure package is approved by the President, the measure will also empower the IRS to raise an additional $28 billion through crypto taxes.
Cryptocurrency exchanges will be required to record their transactions to the Internal Revenue Service under a bill signed by President Joe Biden. The House of Representatives has enacted legislation that broadens the IRS’s definition of “broker” to include organizations that trade digital assets. If President Biden signs the bill, centralized crypto exchanges like Coinbase will be classified as “brokers” and will be subject to new tax rules.
Thanks to new legislation signed into law by President Donald Trump on Thursday, cryptocurrency brokers will be compelled to file 1099 forms with their customers’ names and addresses. As a result of the proposed reporting requirements, the government expects to be able to raise an additional $28 billion in tax revenue. If taken broadly, the new term of “broker” may encompass crypto miners, validators, crypto wallet companies, and even dApp developers, according to crypto firms.
What Steps Did the Bill Take to Become Law?
Non-custodial participants, including miners, validators, wallet providers, and protocol creators, are exempt from filing tax returns under the amendment. Senators voted against a previous version of the bill that would have exempted those companies from the new reporting obligations. Senator Toomey sought unanimous approval from the audience, but Senator Bernie Sanders sabotaged it. Senator Ted Cruz then requested that the bitcoin provisions of the bill be removed. Senator Shelby then attempted but failed, to attach his own military expenditure amendment to Cruz’s.
Solana and other members of the Proof of Stake Alliance say it is illegal to falsely declare the receipt of digital assets because of a missing amendment in the tax laws. They will be required to declare any digital assets worth more than $10,000, as well as the identity and social security number of the person making the payment, under the bill. You have committed a crime if you do not comply within 15 days.
Furthermore, The US Supreme Court could declare that the change to Section 6050I is unlawful. Anyone who receives $10,000 in cash is required to disclose it to the IRS under the current tax code. Authorities would need a warrant under the Fourth Amendment to investigate crypto transactions, according to Coin Center Research Director Peter Van Valkenburgh. Although the US Treasury has declared that the new legislative definition of “broker” will not be understood to cover non-custodial crypto actors, the government still needs to address a number of issues before crypto investors are pleased. If the President signs it, however, the IRS’s task will be accomplished, and Congress will just have to deal with the remaining difficulties.