The crypto tax reform bill reintroduced by a group of bipartisan lawmakers in DC
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(Kitco News) – A bipartisan group of U.S. lawmakers, led by House Financial Services Committee Chairman Patrick McHenry (RN.C.) and Representative Ritchie Torres (DN.Y.), plans to reintroduce legislation that would reform provisions on the reporting of crypto tax first introduced in 2021’s bipartisan Infrastructure Investment and Jobs Act (IIJA).
Punchbowl news was the first outlet to report the story where lawmakers want to refine the Keep Innovation in America Act by narrowing the definition of a crypto “broker” for tax purposes.
Based on a draft of the bill, the requirement for brokers to report digital asset transactions worth more than $10,000 to the Internal Revenue Service will be pushed back from 2024 to 2026. Terminology has also been changed so that “miners and validators, hardware and software developers, and protocol developers ” are not considered to be brokers.
At the time the bill was introduced, crypto advocates said the law’s treatment of digital assets would burden non-financial firms such as crypto miners and certain software vendors with “impossible to meet reporting requirements.”
The recently updated bill from McHenry and Torres addresses these concerns and goes a step further by applying significant limits to the federal government’s ability to define what a “digital asset” is. The IIJA originally gave the Treasury Department discretionary power to determine the definition of “digital asset,” but the changes in Keep Innovation in America put limits on that power.
According to Rep. McHenry, the bill corrects “misguided policy and regulatory overreach [that] threatens to push this dynamic industry – and its potential benefits – overseas.”
Rep. Torres, a top ally in the crypto sector from the Democratic side of Capitol Hill, said the bill would provide “much-needed legal and regulatory clarity to help cement our continued place as the global leader in crypto technology and innovation.”
Rep. Warren Davidson (R-Ohio), Ro Khanna (D-Calif), Darren Soto (D-Fla.), Eric Swalwell (D-Calif.) and House Majority Whip Tom Emmer are returning sponsors of the bill, while Reps. French Hill (R-Ark.), who now serves as chairman of the House Financial Services Subcommittee on Digital Assets, and David Schweikert (R-Ariz.) have also signed on to support the legislation.
How the bill moves forward will serve as a litmus test for how Congress intends to regulate the cryptocurrency sector in the future. The crypto industry is in dire need of backers in government amid a rash of enforcement actions against industry players by the Securities and Exchange Commission.
According to the text of the bill, consistent and accurate reporting of digital asset transactions is required. Congress must work to bring legal and regulatory certainty to the digital asset industry. Clear driving rules promote technology and innovation.”
The passage of the new bill would give the sector a much-needed political victory as it looks to recover from the damage to its reputation following the high-profile collapses of Terra/Luna in May and FTX in November, which sent contagion shockwaves reverberating. across the ecosystem.
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