US Treasury says Crypto Community’s Fear About Tax Provision in the Infrastructure Bill is Unwarranted
While the Treasury Department yet again tries to assuage the crypto community’s concerns, Jerry Brito of CoinCenter says there’s “little comfort” in it.
The US Treasury Department said it would not target miners, developers, stakers, and others even if the cryptocurrency tax reporting provision in the $1 trillion Infrastructure bill is not amended; a Treasury official told CNBC.
The controversial bill requires “brokers” to comply with the proposed IRS reporting requirements, which in itself is not the concerning part, but the broad definition of brokers is what has the crypto community fighting back as it covers developers, miners, and hardware and software providers that really don’t have the required information for reporting.
But these fears are unwarranted, said a Treasury official, as reporting requirements would only be extended to those able to comply.
Before establishing the law, the Treasury also plans to research to understand who will be asked to comply and verify whether they are capable of doing so, a process that could take years, added the Treasury official.
This isn’t the first time that an unnamed Treasury official has said so; recently, Bloomberg also reported having talked to a Treasury official.
But there’s “little comfort” in it, said Jerry Brito, Executive director of CoinCenter.
While “glad to hear that Treasury officials are telling reporters on background that they don't intend to target miners if the infrastructure bill's crypto tax provision becomes law,” Brito said, it’s strange that they are saying that because, by definition, non-brokers will be interpreted to be brokers.
Moreover, the point of the bill is to expand the definition of “broker” such that the Treasury could interpret it to even cover non-middlemen who would not qualify as brokers today.
The expanded definition of “broker,” however, is only one of the concerns about this provision as others just haven’t gotten as much attention because they weren't the subject of the bipartisan Senate amendment effort such as reporting on the broker to a non-person, i.e., a person with a self-hosted wallet, similar to the former Treasury Secretary Steven Mnuchin midnight rule, Brito added.
“I appreciate that it seems to be Treasury's intention to get this right, and we look forward to engaging in any regulatory process in the years to come.”
The crypto tax provision is estimated to raise $28 billion over a decade. Two sets of amendments to the bill were introduced earlier this month which were coming to a compromise and were supported by the Treasury Secretary Janet Yellen only for a lone Senator Richard Shelby to end that development.
The bill has now moved into the House and, if signed into law, won’t go into effect until 2023.