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Last year, US legislatures were torn between supporting and rejecting the Infrastructure Bill due to its lack of clarity. However, the recent announcement by the US Treasury is a major win for the cryptocurrency industry.
The US Treasury Department has announced that cryptocurrency miners and “ancillary parties” will be exempt from tax reporting requirements.
US Treasury exempts some crypto parties from IRS reporting
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The US Treasury sent a letter to a group of senators on Friday with recommendations to exempt crypto miners, stakers and other players from a tax rule that required them to report customer transactions to the Internal Revenue Service (IRS).
Jonathan Davidson, the Treasury Assistant Secretary for Legislative Affairs, stated that
Ancillary parties who cannot get access to information that is useful to the IRS are not intended to be captured by the reporting requirements for brokers.
The Senate received the news well, with Senator Rob Portman saying that the exempted parties are not subject to the tax reporting requirements. In the letter, Davidson said that crypto validators are not privy to information of a transaction being part of a sale. The official also said that firms offering hardware and software crypto wallets are not conducting brokerage activities.
Treasury to continue assessing reporting requirements
The US Treasury also added that it would continue monitoring this tax requirement to understand the parties subject to it and the extent to which they will report the transactions. The consideration would monitor centralized exchanges, decentralized exchanges and peer-to-peer exchanges.
A Bloomberg report stated that the Treasury would issue its stand on the definition of a broker. The issue of the definition of a broker stems from the $1 Trillion Infrastructure Bill signed into law in November last year. The bill required that all firms operating in the digital asset sector report transactions valued at over $10,000.
As aforementioned, the bill caused divisions among legislatures, with some senators such as Cynthia Lummis, Pat Toomey and Ron Wyden urging the Treasury to issue clarity on the definition of a broker. Some senators also proposed a Bipartisan bill that exempted some parties from these tax requirements.