A group of Senators filed an amendment this week to clarify the definition of “broker” as it relates to digital asset third-party reporting requirements.
The amendment – introduced by U.S. Sens. Ron Wyden (D-OR), Cynthia Lummis (R-WY), and Pat Toomey (R-PA) – would define brokers as those who conduct transactions on exchanges where consumers buy, sell and trade digital assets.
“Investors failing to pay tax they owe through cryptocurrency is a real problem, and I strongly support third-party reporting by exchanges where cryptocurrency is bought, sold, and traded. Our amendment makes clear that reporting does not apply to individuals developing blockchain technology and wallets. This will protect American innovation while at the same time ensuring those who buy and sell cryptocurrency pay the taxes they already owe,” Wyden, chair of the Senate Finance Committee, said.
Further, it would not relate to persons who engage in mining or staking, selling hardware or software that an individual may use to control a private key, or developing digital assets or their corresponding protocols for use by other persons.
“While Congress works to better understand and legislate on issues surrounding the development and transaction of cryptocurrencies, it should be wary of imposing burdensome regulations that may stifle innovation. By clarifying the definition of broker, our amendment will ensure non-financial intermediaries like miners, network validators, and other service providers—many of whom don’t even have the personal-identifying information needed to file a 1099 with the IRS—are not subject to the reporting requirements specified in the bipartisan infrastructure package,” Toomey said.
Lummis called the amendment a responsible step toward fully incorporating digital assets into the U.S. financial sector.
“The digital asset and financial technology space is incredibly complicated, and we have spent long hours working in the Senate, with industry stakeholders, and with the administration to find a way to effectively integrate digital assets into our tax code without harming the technology or stifling innovation,” Lummis said.