U.S. Reps. Patrick McHenry (R-NC) and Tim Ryan (D-OH) are urging Treasury Secretary Janet Yellen to provide clarity ahead of the expected preliminary guidance on the new digital asset reporting requirements.
McHenry, ranking member on the House Financial Services Committee, and Ryan are the original co-sponsors of the Keep Innovation in America Act, which would amend the digital asset reporting provisions in the Infrastructure Investment and Jobs Act. The amendments seek to provide clarity to the nascent digital asset ecosystem.
“We write regarding the reporting requirements included in the Infrastructure Investment and Jobs Act. Section 80603 imposed reporting requirements on digital asset market participants that are incompatible with the technology’s operation and the privacy rights of users. As the Department develops rules and guidance for compliance with this Section, we believe that additional clarity is necessary for certain market participants. We ask that you look to the bipartisan bill, H.R.6006, the Keep Innovation in America Act, to ensure that any future guidance provides the necessary clarity to the digital asset ecosystem,” McHenry and Ryan wrote in a letter to Yellen.
The lawmakers called Section 80603 ambiguous as it affords the Department of Treasury the ability to interpret who within the digital asset ecosystem qualifies as a broker.
“This subjective interpretation has the potential to reach those beyond the intent of Congress. To help constrain a potentially expansive reading of the “broker” definition, we would point you to the definition of “broker” proposed in H.R. 6006. This definition clearly avoids placing unworkable customer reporting obligations on persons who do not, in actuality, have customers (e.g., miners, stakers, protocol nodes, payment channel nodes, developers of protocol or decentralized application software, or similar non-custodial entities),” they wrote.
Further, they said the infrastructure bills give the Treasury Secretary broad authority to define a digital asset. They recommended the definition of a digital asset they included in their bill — H.R. 6006 — to ensure the parameters of the definition are clear.
“Separately, the addition of “any digital asset” to the definition of cash for purposes of Section 6050I of the Internal Revenue Code should be carefully examined prior to its implementation to ensure unintended consequences are mitigated. Overhasty application of these requirements risks the creation of an unlevel playing field for transactions in digital assets and those required to provide them,” McHenry and Ryan wrote.
They add that while consistent information reporting on digital asset transactions is necessary, it should not prevent these technologies and the ecosystem from flourishing due to unclear regulations.