The U.S. House of Representatives has passed a $1.2 trillion infrastructure package that includes a provision for the crypto industry.
The bill, which was passed in a 228-206 vote and will now be sent to President Biden’s desk for approval, includes a clause that would expand the definition of “broker” in the tax code to include “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”
The change will come into effect starting 2024 and would force crypto exchange platforms to record and submit all transfers of digital assets to the Internal Revenue Service (IRS) in a similar fashion that traditional stock exchange companies do.
In August, Republican Representative Tom Emmer of Minnesota raised concerns that the language of the bill would include key players in the crypto space, such as software developers or validators, who do not fall within the scope of a “broker” defined in the traditional financial realm.
According to D.C.-based crypto legal expert Jake Chervinsky, the new legislation may not bode well for the crypto industry but notes that there are still significant details that haven’t been worked out yet.
“Yes, the crypto provisions are just as bad as they were months ago. Yes, the impact of Section 6050I has been underexplored. No, you don’t need to call your reps. The political reality is: it’s out of our hands now.
Importantly, nothing will happen right away. The crypto provisions don’t go into effect until 2024 (for FY2023 reporting). We can try to get them repealed or amended before then.
They also need rulemaking from Treasury to define their scope. We’ll be active in that process.”
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