coindesk.com
The U.S. Treasury Department has signaled that crypto miners and stakers will not face tax reporting obligations that will be implemented for exchanges in a letter sent to a group of senators on Friday.
The letter addresses concerns from the crypto industry that last year’s Infrastructure Investment in Jobs Act would impose undue tax reporting burdens on entities such as crypto miners and stakers that don’t deal directly with customers by broadening the definition of a “broker.” The requirements require brokers to collect detailed information on customers and their trades.
Industry participants pointed out that miners, stakers and other parties don’t typically have access to the know-your-customer information that exchanges have when they facilitate transactions. An overly broad definition might be impossible for some entities to comply with. Treasury’s letter, a copy of which was obtained by CoinDesk, suggests the expanded definition would be limited to parties that already collect this information.
“Existing regulations impose broker reporting obligations only on market participants engaged in business activities that provide them with access to information about sales of securities by taxpayers,” the letter said.
Bloomberg first reported the contents of the letter Friday.
According to the letter written by Treasury Assistant Secretary for Legislative Affairs Jonathan Davidson, the department’s view is 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 department also plans to analyze the “significant differences” between traditional securities supported by brokers, and digital assets.
Davidson added that the Treasury Department plans to issue proposed regulations that reflect how it defines a broker, similar to the rulemaking process it follows for other regulations implemented by federal agencies.
This process will give the general public and industry participants a chance to comment.
A group of U.S. representatives challenged the infrastructure bill's definition of "broker," believing it to be incompatible with the crypto ecosystem, in a letter last month to Treasury Secretary Janet Yellen.