![]() For example, if you are someone who is solely involved with validating distributed ledger transactions through proof of work – commonly known as miners – if you are solely mining, you will not be considered a broker. “The purpose of this provision is not to impose new reporting requirements on people who do not meet the definition of brokers. “Some of us were on this floor today, including Senator Lummis, Senator Warner, Senator Toomey, and myself to try to get that amendment passed and we were not able to do so. That’s the goal we had in our discussions over a compromise amendment, but unfortunately we have been unable to consider and adopt that amendment thus far in this debate. The purpose of this discussion is to further clarify that is the actual intent of the underlying bill. The Treasury Department, the nonpartisan Congressional Joint Committee on Taxation, and others believe that the current language is clear enough that the reporting requirements only cover brokers. “The concern has been expressed that some in the cryptocurrency industry who are not brokers would be caught up in this definition. Under the bill, a broker is defined as quote ‘any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.’ For tax purposes, this means a sale on behalf of someone else. “The cryptocurrency provision in the bill makes it clearer as to who counts as a broker within this market. “The underlying bill has two simple provisions to address that. ![]() “Today there is a lack of clarity on how these reporting rules apply to digital asset transactions. Those information returns are prepared by their brokers or custodians, or other agents involved in the effecting of the sales. Taxpayers who sell stocks or other securities through a broker receive an information return, IRS Form 1099-B, that provides information on the gross proceeds and the basis of those sales. “Under IRS rules, sales or exchanges of assets like digital assets give rise to gain or loss in the same manner as sales of securities. I would like to discuss the provisions in the bill that address information reporting requirements for digital asset brokers. “As we know cryptocurrency is a digital asset that more and more people are investing in, and we should want that to continue in a healthy and sustainable way. Senator Portman: “I rise today to clarify the provisions in the underlying bill text that we are working on this evening. Warner and Portman closed by emphasizing the need to bring clarity and legitimacy for the cryptocurrency industry and to strike the appropriate balance between capturing the promised benefits, and guarding against the potential for serious abuse and creation of a shadow financial system beyond the reach of established rules to combat illicit finance and tax evasion.Ī transcript of the colloquy can be found below and a video can be found here: ![]() Warner and Portman noted how the Treasury Department, the nonpartisan Congressional Joint Committee on Taxation and others believe that the current language is clear that the reporting requirements only cover brokers, and would exclude people who are solely involved with validating distributed ledger transactions through proof of work, proof of stake, and other validation methods that will be developed and come to market as the technology evolves, as well as persons solely engaged in the business of selling hardware or software that allows people to access their private keys. Portman and Warner discussed how under the bill, a broker is defined as “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” For tax purposes this means a sale on behalf of someone else. ![]() Senators Mark Warner (D-VA) and Rob Portman (R-OH) conducted a colloquy to clarify the scope and intent of a provision in the bipartisan Infrastructure Investment & Jobs Act regarding implementing information reporting requirements for cryptocurrency brokers. WASHINGTON – Today on the Senate floor, U.S.
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