Media: US Treasury to publish guidance on taxation of cryptocurrencies

US Treasury to publish guidance on taxation of cryptocurrencies

The US Treasury Department will clarify the tax reporting requirements for cryptocurrency companies that have become part of the infrastructure bill. The provisions will only affect entities deemed by the Treasury to be brokers. This was reported by Bloomberg, citing a Treasury official.

According to the publication's interlocutor, the guidance, which may be published as early as next week, is intended to reassure industry participants. Miners, equipment manufacturers and software developers are not subject to the new tax reporting requirements unless they are brokers.

Finance Ministry guidance will not grant exemptions based on how a company positions itself, focusing instead on whether an entity qualifies as a broker under the tax code.

The bipartisan bill, aimed at updating the infrastructure of the United States, contains new reporting requirements for participants in the digital asset industry. It also expands the definition of "broker" in the US tax code.

According to experts, blockchain miners and node operators, wallet developers, liquidity providers in DeFi-protocols and other non-custodial players could be required to report to the IRS on their users' activities

The bill's requirements in this form are not technically feasible, for which the document has been repeatedly criticized by the crypto industry, including Elon Musk and Jack Dorsey.

Their concerns are also shared by some senators. Ron Wyden, Cynthia Lummis and Pat Toomey have proposed excluding these activities from the document and not extending the rules applicable to brokers to them.

Rob Portman, one of the sponsors of the bill, along with Mark Warner and Kirsten Sinema, introduced a competing amendment. Due to procedural problems, the amendment failed to pass; it went to the House of Representatives in its original form.

The Bloomberg interlocutor stressed that some of the concerns of industry participants were valid, but much of the lobbying was "aimed at limiting the Treasury's authority to collect legitimate tax information". He added that the Finance Ministry is not going to prosecute companies that are de facto unable to provide transaction data.

Those wishing to revise the wording of the bill in the House are unlikely to succeed, as changing the section on cryptocurrencies would open up the entire document to additional edits. The Treasury leadership will therefore be crucial.

As a reminder, House member Anna Eshoo asked Speaker Nancy Pelosi in an open letter to amend the cryptocurrency tax provisions in the infrastructure bill.

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