Crypto Brokers Face Redefinition Under Proposed U.S. House Bill - BLOOMBERG
(Bloomberg) -- A bipartisan group of House lawmakers wants to alter how the government defines who counts as brokers of crypto assets, less than a week after the current designation became law.
Cryptocurrency transactions totaling $10,000 or more would no longer be treated as similar to cash for tax reporting purposes, though sales would continue to be taxed as capital gains.
The bill, sponsored by Representatives Patrick McHenry, a North Carolina Republican, and Tim Ryan, an Ohio Democrat, would exclude hardware and software developers, as well as miners who validate crypto transactions through the blockchain.
In a statement McHenry, the top Republican on the House Financial Services Committee, said that the bill could “fix these poorly constructed standards and ensure they are compatible with how this new technology actually works.”
Allies of the industry opposed the definition of a cryptocurrency broker that was included in the bipartisan infrastructure law passed by Congress and signed by President Joe Biden earlier this week, criticizing that language as too broad.
Under that definition, developers and other non-financial professionals could be expected to record and report cryptocurrency transactions used through their software, hardware, or the decentralized mechanism cryptocurrencies use to verify transactions through participating in their network, to the Internal Revenue Service.
Though the Treasury Department made assurances that it did not view the language as that broad, the industry has sought to change that definition ever since it was added as a measure to offset the cost of infrastructure spending during August negotiations in the Senate.
Similar bipartisan legislation to change that broker definition has been introduced by in the Senate by Ron Wyden of Oregon and Cynthia Lummis of Wyoming. It’s not yet clear when either bill could receive a vote in their chambers, or how the Biden administration might weigh in on them.
“We have to figure out how to balance consumer protections and reasonable oversight while simultaneously providing these technologies and companies with the necessary space they need to grow, innovate and democratize the financial sector,” Ryan said in the statement touting his and McHenry’s bill.
“I’m committed to finding that balance, and I believe the McHenry-Ryan legislation is the best path to get us there.”
Several industry and third party advocacy groups, including the Blockchain Association, Electronic Frontier Foundation, Americans for Tax Reform, National Taxpayers Union, and Association for Digital Asset Markets, endorsed the bill.