Infrastructure Bill Amendment Calls for A Level Playing Field with TradeFi, Without Penalizing Crypto
Senator Cynthia Lummis (R- Wyo), Ron Wyden (D-Ore), and Pat Toomey (R-Pa) are behind the amendment proposal that integrates crypto into the financial system and protects American innovation while ensuring taxes are paid.
Crypto supporter Senator Cynthia Lummis (R- Wyo), along with Senator Ron Wyden (D-Ore) and Senator Pat Toomey (R-Pa), has filed an amendment to the bipartisan infrastructure bill. For approval, it would need to gain at least 60 votes in the Senate. Lummis, who is also a Bitcoiner since 2013 said,
“Digital assets are here to stay, and while more work needs to be done, the Wyden-Lummis amendment integrates them into the financial system while leaving room for innovation.”
Financial innovation is bipartisan. We need input from Republicans & Democrats to ensure that we effectively integrate digital assets into our tax code without harming the technology. I look forward to continuing this work as we bring our financial industry into the 21st century.
— Senator Cynthia Lummis (@SenLummis) August 4, 2021
The purpose of the amendment is to clear up confusion about what constitutes a “broker” for reporting information to the IRS. Also, the update aims to ensure the term excludes validators, hardware and software makers, and protocol developers. Wyden, chair of the Senate Finance Committee, said in a statement,
“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.”
We support @SenToomey and @RonWyden’s effort to amend the provision. The infrastructure bill’s current tax reporting language would put unworkable requirements on #Bitcoin node runners, developers, and miners. This is the way: https://t.co/n3OWAig0ty
— jack (@jack) August 3, 2021
If the changes are included in the final bill, that would be a big win for the crypto industry. The bill’s broad definition of “broker” includes entities that don’t have customers whose information is needed to be reported to the IRS. Toomey, a ranking member on the Senate Banking Committee, in a statement, said,
“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.”
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.
— Senator Pat Toomey (@SenToomey) August 4, 2021
However, clarifying the provision would not affect the reporting requirements on crypto exchanges like Coinbase that operate on behalf of customers, which the crypto market participants have said they support. Brian Armstrong, Coinbase CEO said,
“Coinbase is happy to help customers fulfill tax obligations just like the rest of the financial services industry. We've been doing this for years, and issuing more 1099s is a great idea.”
8/ Policymakers play a critical role in ensuring that tech innovation can flourish in the United States. I hope that they keep this in mind and don’t impose draconian burdens on an industry that will play a major role in the innovative future of our country.
— Brian Armstrong (@brian_armstrong) August 4, 2021
Armstrong did argue that the bill imposes sweeping and unprecedented reporting requirements that will force exchanges and others to surveil their customer’s transactions in a more intrusive way than the rest of traditional finance.
“All we ask for is an even playing field with traditional finance that doesn't penalize cryptocurrency unfairly,” he added.
It’s time to tell your senators in Congress to support the Wyden-Lummis-Toomey amendment to fix the unworkable crypto provisions in the Senate infrastructure bill.
Don't think you don't have to because everyone else will. Call right now. Do it here: https://t.co/Aqrih7LX9o
— Jerry Brito (@jerrybrito) August 4, 2021
Blockchain Association, a crypto trade association that works to change public policy at the federal level, said it supports the amendment, sensible reporting requirements consistent with those applied to traditional financial services, in a joint statement published with the crypto policy-focused nonprofit Coin Center, Square, Coinbase, and VC Ribbit Capital. The Blockchain Association said in its statement,
“The development of crypto, and financial innovation generally, has enormous potential for the American economy and the American people through increased job creation and GDP growth.”