Many industry groups quickly released statements supporting the change effort, including the Blockchain Association, Coinbase, Coin Center, Ribbit Capital and Square, as well as the Association for Digital Asset Markets.
“Senators Wyden, Lummis and Toomey are correct that this wording would impose unenforceable requirements on an infant industry and we support their proposed amendment to the provision. Clarifying the provision to address our concerns would not affect the requirements of statement on crypto exchanges that operate on behalf of clients, ”the Blockchain Association, Coinbase, Coin Center, Ribbit Capital and Square said in a joint statement.
A spokesperson for Sen. Rob Portman (R-Ohio), who helped draft the legislation, argued that it would not force non-brokers, such as software developers and crypto miners, to comply with IRS reporting obligations. A spokesperson for Portman did not immediately comment on the proposed amendment.
The idea behind the provision is to require more government reporting when people buy and sell cryptocurrencies and other digital assets. The increase in reporting to the Internal Revenue Service from crypto-exchange platforms and other entities designated as brokers would help raise $ 28 billion slated to help fund infrastructure projects.
But crypto advocates fought to revamp the proposal, as they said the bill’s definition of who counts as a broker was so sweeping it would encompass many unintended targets, including software engineers. They also warned that the legislation would give the IRS too much authority to require additional information when people transfer assets out of brokerage houses.
“Digital assets are here to stay,” Lummis said in a statement. “While much remains to be done, this amendment is a responsible step towards the full integration of digital assets into the US financial industry.”
Toomey said in a statement: “As Congress strives to better understand and legislate on issues surrounding cryptocurrency development and trading, it should be wary of imposing onerous regulations that could stifle innovation. By clarifying the definition of broker, our amendment will ensure non-financial intermediaries such as miners, network validators and other service providers – many of whom do not even have the personal credentials necessary to file. a 1099 with the IRS – not subject to the reporting requirements specified in the bipartite infrastructure package. “
Brian Faler contributed to this report.