Why These Senators Demand Clarity From Treasury On Crypto

In the U.S. a bipartisan group of Senators sent a letter to the Secretary of the Treasury Janet Yellen regarding the crypto space. Signed by U.S. Senator Cynthia Lummis, Pat Toomey, Rob Portman, Mark Warner, Mike Crapo, and Kyrsten Sinema it makes a demand to Yellen that could benefit this sector.

In 2021 the U.S. administration led by Joe Biden proposed an Infrastructure and Jobs Act (IIJA) Bill that was approved in both Congressional chambers into law. The plan is to improve the U.S. supply chains, roads, and other components to create a positive economic impact.

For the crypto industry, as Bitcoinist has reported, the law could mean bad news. As the Senators recounted, the IIJA will change information reporting by brokers of digital assets to the IRS and could force miners, digital wallet providers, and other actors in the industry outside the law as they would require providing information which, in many cases, lack.

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The U.S. Senators that signed this letter to Yellen believe is “one of the first efforts” made by the Federal government to integrate digital assets into “our nation’s tax code”. However, they asked the Secretary of the Treasury to clarify, by the end of 2021, their definition of a broker.

Otherwise, this term could “capture” developers, miners, stakers, and other entities that “solely” provide certain services related to custody or software creation and not the transaction of digital assets. If this were to happen, the industry could face severe hurdles and many actors could be forced to relocate abroad for the benefit of other countries.

Two U.S. government agencies have already provided a definition that would exclude miners, developers, and other actors, as seen below, but the Senators demanded the Secretary of the Treasury for clarification on the institution’s definition for these entities.

(…) our understand from both the Administration and the Joint Committee on Taxation is that they shared the same interpretation of the provision as its authors: that the reporting requirements only cover brokers who enable the transfer of digital assets for consideration -and not other parties (…).

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The U.S. Senators asked Janet Yellen to consider the different consensus algorithms and the difference between each crypto project. In that way, the U.S. will not stall innovation in finance and other sectors that have benefited from cryptocurrencies and blockchain technology.

The government officials emphasize the priority on consumers and constituents, many of which could be Bitcoin holders. Thus, the need to oversee that Congress to “ensure that the provision (on crypto and brokers) is implemented” as intended. The Senators added the following:

Digital assets could be impactful technological developments in certain sectors, and clear guidelines on tax reporting requirements will be important to those in this ecosystem. It will be important that we continue to work to provide further clarity, and to help ensure that the United States remain a global leader in financial innovation (…).

Related Reading | Crypto Regulation: U.S. Senator Lummis Wants Hands-Off Approach From Congress

As of press time, the crypto market cap stands at $2,2 trillion in the 4-hour chart.