US Lawmakers Ask Janet Yellen to Define ‘Broker’ for Infrastructure Bill

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A bipartisan group of U.S. Senators want Treasury Secretary Janet Yellen to specify how the finance ministry will define a “broker” for crypto tax reporting purposes.

In an open letter published Tuesday, Senators Rob Portman (R-Ohio), Mark Warner (D-Va.), Mike Crapo (R-Idaho), Kyrsten Sinema (D-Ariz.), Pat Toomey (R-Pa.) and Cynthia Lummis (R-Wyo.) wrote that the crypto industry is concerned about how a broker might be defined after the passage of the Infrastructure Investment and Jobs Ac, the bipartisan infrastructure bill signed into law last month.

The bill contains a handful of crypto provisions, with one imposing reporting requirements on brokers drawing attention over the possibility that any party engaged in facilitating transactions might be classified as a broker, including software developers or wallet manufacturers. Efforts to modify the provision before the bill’s passage by way of the Senate have been in the end unsuccessful.

“Some market participants have expressed concern that an overly-broad interpretation of this provision’s definition of ‘broker’ could capture certain individuals who are solely involved with validating distributed ledger transactions through mining, staking, or other methods, and entities solely providing software or hardware solutions enabling users to maintain custody of their own digital asset wallets,” Tuesday’s letter mentioned.

The lawmakers wrote that they believed the Joint Committee on Taxation and the presidential administration shared the identical definition of “broker” because the invoice’s authors, which embrace Portman and Sinema. This would imply the supply applies to entities that really “enable the transfer of digital assets” and never “ancillary” events.

Portman and Warner mentioned in a colloquy that the supply will not be meant to enact new reporting necessities on entities that aren’t brokers, the letter mentioned.

“We urge the Department of the Treasury to provide information or informal guidance as soon as possible – no later than the end of the current calendar year – regarding the definition of ‘broker’ as discussed during the legislative process. We are also prepared to offer legislation to further clarify that intent,” the letter mentioned.

The lawmakers additionally ask Yellen to start the rulemaking course of – by which the Treasury Department will clarify the way it plans to enact the regulation and solicit suggestions – “in an expeditious manner.”