US Lawmakers Oppose Encryption Provisions in Infrastructure Bill

Lawmakers from both parties are resisting changes in the newly passed Infrastructure Act to tax reporting rules for cryptocurrency brokers and transactions over $10,000.

A group of 10 Democratic lawmakers, led by Rep. Darren Soto of Florida, called for changes to the definition of a broker in the infrastructure bill passed into law on Nov. 15.

The group released an open letter, co-signed by Soto and Reps. Ro Khanna, Stacey E. Plaskatt, Eric Swalwell, Tim Ryan, Susan Wild, Marc Veasy, Jake Auchincloss, Al Lawson, Charlie Crist, calling for renewal on a bipartisan basis Section 6045(c)(1) of the Tax Code under the Facilities Framework (BIF).

Experts warn that the controversial new rule could see miners, validators and wallet developers being treated as taxable brokers. The letter called on House Speaker Nancy Pelosi to exclude this group on the grounds that they do not engage in brokerage services.

We are united to ensure more tax certainty for cryptocurrencies and work with the IRS on key reforms. Together we will support innovation and protect consumers.

— Rep. Darren Soto (@RepDarrenSoto) November 16, 2021

The letter also addresses concerns about negative market impacts and how the U.S. will maintain its pace of technological innovation if the rules remain in place.

"As written today, the BIF will increase uncertainty in the cryptocurrency industry, pick winners and losers, and hinder the IRS' efforts to accurately tax cryptocurrencies, while ending our country's dominance in the digital asset market relative to other countries. competitive advantage.”

Senators are also pushing to amend tax reporting requirements in the BIF. Democratic Senators Ron Wyden and Republican Senators Cynthia Lumis submitted a proposed bill that they said would protect American innovation, ensure Americans pay the taxes they owe, and "do not apply to development," Bloomberg reported. Individuals with blockchain technology and wallets.”

On November 16, Republican Senator Ted Cruz also introduced a bill to amend the tax code. He called the new reporting rules a "devastating attack" on the cryptocurrency industry. His concerns echo those of some House Democrats who say the current provisions will stifle American innovation and "endanger the privacy of many Americans."

Senators as a whole are only now beginning to gain a deeper understanding of how the cryptocurrency industry works. On November 17, the Joint Economic Committee of the US Congress held a hearing entitled "Demystifying Crypto: Digital Assets and the Role of Government" (Demystifying Crypto: Digital Assets and the Role of Government). During this hearing, they discussed the complex tax entities that should govern centralized exchanges and agreed that privacy and security were top concerns.

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