A pair of U.S. senators are introducing a bill to limit some of the cryptocurrency tax reporting rules in President Biden’s infrastructure legislation.
The aim of the bill is to limit a provision that critics say is overly broad and would suppress digital currency growth. For instance, some cryptocurrency companies providing a service “effectuating” the transfer of digital assets would be forced to report information on their users. In some cases, entities like miners and software developers could be required to report tax data to the IRS they actually have no access to.
The bill was a bipartisan effort between Democrat Senate Finance Committee Chairman Ron Wyden from Oregon and Wyoming Republican Senator Cynthia Lummis. “Our bill makes clear that the new reporting requirements do not apply to individuals developing blockchain technology and wallets,” Wyden said. “This will protect American innovation while at the same time ensuring those who buy and sell cryptocurrency pay the taxes they already owe.”
However, it is unclear when this bill could come up for a vote, as it could also be included as part of other year-end legislative packages. That would also include a provision making it retroactive to the signing of the infrastructure bill.
The bill itself comes following an outpouring of concern from the cryptocurrency industry during the negotiations surrounding the infrastructure bill. Once the tax requirements were inserted into the public-works package, cryptocurrency advocates and companies joined forces over the summer in an effort to amend it. Among those who expressed support for amending the existing language in the infrastructure plan include Square Inc. CEO Jack Dorsey and Coinbase CEO Brian Armstrong.
Introduced to offset some of the cost of the $550 billion in new spending, the crypto tax rules could bring in around $28 billion over a decade, according to The Joint Committee on Taxation, Congress’s official tax scorekeeper.