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Tuesday, Sep 28, 2021

Senators Wyden, Lummis & Toomey: New Infrastructure Bill Shouldn't Apply To Crypto Miners, Developers or Blockchain Firms in Crypto Space

Senators Wyden, Lummis & Toomey: New Infrastructure Bill Shouldn't Apply To Crypto Miners, Developers or Blockchain Firms in Crypto Space

Senators Ron Wyden, Cynthia Lummis, and Pat Toomey have proposed an amendment to a crypto provision seeking to garner $28 billion in taxes, suggesting that some of the provisions in the bipartisan infrastructure deal shouldn't apply to developers, miners, or blockchain firms in the crypto space. 

In an amendment from Oregon Senator Ron Wyden on behalf of himself and Wyoming Senator Cynthia Lummis, with the support of Pennsylvania Senator Pat Toomey, the U.S. lawmakers suggested that some of the provisions in the bipartisan infrastructure deal shouldn’t apply to developers, miners, or blockchain firms in the crypto space.

Specifically, the amendment proposes that the definition of a broker does not include anyone in the business of “validating distributed ledger transactions,” “developing digital assets or their corresponding protocols,” or dealing with mining software or hardware.

“While Congress works to better understand and legislate on issues surrounding the development and transaction of cryptocurrencies, it should be wary of imposing burdensome regulations that may stifle innovation,” said Senator Pat Toomey.

The original language of the bill changed the definition of a broker for tax purposes to include “any person who (for consideration) is responsible for and regularly provides and services effectuating transfers of digital assets.”

That meant a whole range of non-custodial crypto actors, including miners and validators on proof-of-stake networks, would legally be required to file 1099 forms, which ask for customer names and addresses, with the Internal Revenue Service.

Senator Roomey commented on Twitter:

“By clarifying the definition of broker, our amendment will ensure non-financial intermediaries like miners, network validators and other service providers are not subject to the reporting requirements specified in the bipartisan infrastructure package”

“While Congress works to better understand and legislate on issues surrounding the development and transaction of cryptocurrencies, it should be wary of imposing burdensome regulations that may stifle innovation.”

According to majority leader Chuck Schumer, the Senate is planning to vote on multiple amendments to the infrastructure bill, HR 3684, today. Among other things, the bill proposes implementing tighter rules on businesses handling cryptocurrencies and expanding reporting requirements for brokers, mandating that digital asset transactions worth more than $10,000 are reported to the Internal Revenue Service (IRS).

However, the proposed amendment from Wyden, Lummis and Toomey could potentially strike down some of the reporting requirements, should crypto firms not be considered “brokers” in the bill. According to the trio, nothing in the proposed amendment has any effect on some of the existing laws governing cryptocurrencies, including the Securities Act of 1933 and the Securities Exchange Act of 1934.

Ohio Senator Rob Portman, one of the lawmakers behind HR 3684, said on Twitter yesterday that the legislation “does not impose new reporting requirements on software developers, crypto miners, node operators or other non-brokers.” Calling the section on brokers as a “common-sense provision,” Portman claimed that crypto firms simply “must comply with standard information reporting obligations.”

Industry advocacy groups Blockchain Association and Coin Center have released a joint statement with exchange Coinbase, FinTech firm Square, and Ribbit Capital in support of the amendment.

Claiming that the bill’s original language “would place unworkable requirements on crypto technology,” they wrote: “Clarifying the provision to address our concerns would not affect the reporting requirements on crypto exchanges that operate on behalf of customers.”

Senator Wyden is a longtime advocate of web privacy. Last year, he sponsored a bill that would prevent warrantless searches of American’s web browsing histories. Senator Lummis is a major proponent of Bitcoin and believes the currency’s deflationary properties provide an antidote to the Federal Reserve’s expansionist monetary policy. For his part, Senator Toomey in June wrote a letter to Treasury Secretary Janet Yellen asking her to re-think proposed FinCEN requirements to collect data on private cryptocurrency wallets.

The U.S. Senate is scheduled to be in recess starting on Aug. 9, meaning it may be unlikely that all of the amendments to the infrastructure bill will be addressed — or the legislation itself will be passed — until it reconvenes in September.

Source: Three Senators: New Infrastructure Bill Shouldn't Apply To Crypto Miners, Devs – Fintechs.fi

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