A major infrastructure funding bill is being worked on in the US Senate. A feature tucked away in the draft bill would radically change the standards for crypto tax reporting.
The US Senate is working on a $550 billion infrastructure bill to address problems across the country. A bridge collapses in Minnesota, contaminated pipes make drinking water unsafe in Michigan and the internet goes down in Kansas.
However, the cost for those involved in cryptocurrency may be high, with some claiming that it will “kill” the industry as we know it.
The bill includes a provision that broadens the definition of a broker for tax purposes to include “any person who is responsible for and regularly provides and services effectuating digital asset transfers” in the.
Crypto miners, proof-of-stake network validators, and maybe even anyone involved in decentralized finance markets (think liquidators or governance-token holders) will be required to file 1099 forms. The ostensible reason is to ensure people pay taxes on their crypto earnings.
Cryptocurrency wallet regulations would require banks and money service organizations (MSBs) to submit reports, preserve records, and authenticate the identities of consumers. It’s possible that things will deteriorate in the future, according to a new report from the Treasury Department.
General counsel for DeFi lending protocol Compound, Jake Chervinsky, tweeted, “Non-custodial actors, such as miners, are unable to obtain the information required to complete Form 1099s. In practice, this might amount to a de facto mining prohibition in the United States.”
The Senate is considering a bill that would make it harder to conduct anonymous transactions with others using open-source code. The measure could make it hard to conduct transactions with other Bitcoin users, an attorney says.
“It defies logic to design a policy that makes compliance virtually difficult, unless the purpose is to kill the industry,” Chervinsky remarked.
The bill’s language is “broad enough as written to potentially include miners and others in the crypto field,” Chervinsky says. It’s unclear whether or not this clause would be included in the final law, which is expected to pass.
The draft guidance for virtual asset service providers from the Financial Action Task Force has been postponed. The approach is opaque, according to the group Fight for the Future, and “appears to be a devious backdoor technique of adopting the newly postponed FATF recommendations without real democratic participation.”
Senator Claire McCaskill stated that the infrastructure bill should not be tacked on at the last minute to other bills that must pass. Senators are still revising the bill, which might be put up for a final vote next week before Congress goes on vacation on August 9.
