Crypto tax reform bill reintroduced by a group of bipartisan lawmakers in D.C.
|Get all the essential market news and expert opinions in one place with our daily newsletter. Receive a comprehensive recap of the day's top stories directly to your inbox. Sign up here!|
(Kitco News) - A bipartisan group of lawmakers in the United States, co-led by House Financial Services Committee Chair Patrick McHenry (R-N.C.) and Rep. Ritchie Torres (D-N.Y.), are planning to reintroduce legislation that would reform crypto tax reporting provisions that were first introduced in 2021’s bipartisan Infrastructure Investment and Jobs Act (IIJA).
Punchbowl news was the first outlet to report on the story in which lawmakers are looking 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 on digital asset transactions worth more than $10,000 to the Internal Revenue Service would be pushed from 2024 to 2026. The terminology has also been altered so that “miners and validators, hardware and software developers, and protocol developers” are not considered to be brokers.
At the time the bill was first introduced, crypto advocates said that the law’s treatment of digital assets would burden non-financial firms like crypto miners and certain software providers with “impossible-to-fulfill reporting requirements.”
The newly updated bill from McHenry and Torres addresses those 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 to the Keep Innovation in America place limits on that power.
According to Rep. McHenry, the bill rectifies “misguided policy and regulatory overreach [that] threatens to push this dynamic industry – and its potential benefits – overseas.”
Rep. Torres, a top crypto sector ally from the Democratic side of Capitol Hill, said the bill will provide “much-needed legal and regulatory clarity to help cement our continued place as the global leader in crypto technology and innovation.”
Reps. 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 the chair of the House Financial Services subcommittee on digital assets, and David Schweikert (R-Ariz.) have also signed on to back the legislation.
|Coinbase launches Crypto435, a pro-crypto advocacy initiative|
How the bill fares moving 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 supporters in the government amid a rash of enforcement actions on industry players by the Securities and Exchange Commission.
According to the text of the draft bill, “Consistent and accurate reporting on digital asset transactions is necessary. Congress must work to bring legal and regulatory certainty to the digital asset industry. Clear rules of the road fosters technology and innovation.”
The passage of the new bill would give the sector a much-needed policy win as it looks to recover from the damage done 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.