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The infrastructure bill proposed in the US Congress aims at revamping how crypto exchanges perform operations amid the changing regulatory context
The $1 trillion bipartisan US bill proposal has raised concerns for the crypto reporting regime. For crypto tax collection, it defines “broker” in rather unusual terms stating that only entities providing products and services to customers fall under the category of qualified brokers.
The bill currently under discussion in the Senate aims at infrastructure developments across the States, with $28 million to be paid in part for the bill from taxes acquired from crypto transactions. An earlier draft of the bill came with a broader explanation of brokers and changes to information sharing protocols regarding transactional reporting.
While US Senator, Drew Nirenberg, shares his opinion about the bill in these words with CoinDesk,
“This legislative language does not redefine digital assets or cryptocurrency as a ‘security’ for tax purposes, impugn on the privacy of individual crypto holders, or force non-brokers, such as software developers and crypto miners, to comply with IRS reporting obligations. ”
He further adds that these new provisions bound entities acting as brokers (those facilitating trades for clients as an intermediary) to comply with the defined reporting obligations. A statement by another spokesperson clarified that this opinion was only meant for the press and not intended for the Congressional hearing.
After the update to the bill, people providing virtual asset transfers are deemed as brokers as per the draft version of the bill. It neither openly includes decentralised exchanges nor excludes crypto miners, software service providers and node operators as part of the broker’s definition.
According to the latest version of the bill, brokers are,
“Any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person”
While the bill redefines the crypto regulatory regime, it still needs to add substance regarding implementation practices for service providers operating privately.