Crypto-related language said to be contained in a still-in-flux bipartisan infrastructure spending bill has spurred activity lobby groups in Washington, D.C.
On Thursday, the Blockchain Association derided the proposed spending package as one that "threatens crypto innovation." As previously reported, one of the bills "pay-fors" is tightened tax reporting requirements for crypto companies, which are estimated to raise some $28 billion to be used to fund infrastructure projects over a period of years.
But the controversy centers around which types of crypto companies would be considered "brokers" under the proposed changes, based on drafted language obtained this week by CoinDesk's Nik De. The prevailing concern is that miners, decentralized finance startups and others not involved in the actual brokerage of digital assets will be hit with overly heightened compliance burdens. According to a fact sheet reviewed by The Block, the language "[updates] the definition of broker to reflect the realities of how digital assets are acquired and traded."
According to Kristin Smith of the Blockchain Association, such burdens risk pushing crypto companies outside of the United States entirely.
“While improvements to our nation’s infrastructure are important, the hastily drafted language around revenue raising provisions in the infrastructure package could have unintended consequences that strike at the heart of innovation in the cryptocurrency ecosystem, risk driving jobs overseas, and may jeopardize Americans’ Fourth Amendment protections," Smith said in a statement.
She later tweeted that the organization has had "dozens of conversations with congressional members and staff" to address what she called "unworkable IRS reporting requirements on non-custodial entities."
Jerry Brito, executive director of Coin Center, also derided the current language in the bill in a set of tweets, writing that "[u]nfortunately, in the drafts we've seen, the category of persons who would be obligated to report is so broad that it potentially covers persons who only provide software or hardware to customers and who have no visibility whatsoever into users’ transactions."
"It potentially also covers miners and DEXs. The saving grace is that arguably miners (and DEXs for that matter) do not have 'customers' as defined in the tax code," he continued, going on to add: "We worked all day yesterday trying to fix and will continue to do so today. Stay tuned."
The Senate took a key step toward passage of its infrastructure deal on Wednesday. As of press time, the legislative language is not publicly available, though details have begun to be made public through the news media.
The situation around the deal remains fluid in spite of Wednesday's vote. On Thursday, a non-partisan watchdog group said that the reported spending offsets may only cover part of the bill's planned expenditures.