Numerous industry groups quickly issued statements supporting the amendment effort, including the Blockchain Association, Coinbase, Coin Center, Ribbit Capital, and Square, as well as the Association for Digital Asset Markets.
“Senators Wyden, Lummis, and Toomey are right that this language would place unworkable requirements on a nascent industry and we support their proposed amendment to the provision. Clarifying the provision to address our concerns would not affect the reporting requirements on crypto exchanges that operate on behalf of customers,” the Blockchain Association, Coinbase, Coin Center, Ribbit Capital, and Square said in a joint statement.
A spokesperson for Sen. Rob Portman (R-Ohio), who helped write the legislation, has argued that it would not force non-brokers, such as software developers and crypto miners, to comply with IRS reporting obligations. A spokesperson for Portman did not immediately provide comment on the proposed amendment.
The idea behind the provision is to require more reporting to the government when people buy and sell cryptocurrencies and other digital assets. Increased reporting to the Internal Revenue Service from crypto trading platforms and other entities designated as brokers would help raise a projected $28 billion to help finance infrastructure projects.
But crypto advocates have been fighting to revamp the proposal because they said the bill’s definition of who counts as a broker was so sweeping that it would sweep in numerous unintended targets, including software engineers. They have also warned the legislation would give the IRS too much authority to demand additional information when people transfer assets out of brokerages.
“Digital assets are here to stay,” Lummis said in a statement. “While much more work needs to be done, this amendment is a responsible step toward fully incorporating digital assets into the U.S. financial sector.”
Toomey said in statement: “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. By clarifying the definition of broker, our amendment will ensure non-financial intermediaries like miners, network validators, and other service providers—many of whom don’t even have the personal-identifying information needed to file a 1099 with the IRS—are not subject to the reporting requirements specified in the bipartisan infrastructure package.”
Brian Faler contributed to this report.