Three US senators have introduced an amendment to the Infrastructure Bill to save the cryptocurrency industry, among them is Cynthia Lummis along with colleagues Wyden and Toomey.
The bill is being debated by the US Congress.
As explained by the CEO of Coinbase Brian Armstrong, there is a part of this complex bill, which touches several sectors, that threatens to undermine the crypto sector.
It defines a broker as anyone who transfers digital assets. This would include not only exchanges such as Coinbase, but also miners, validators and smart contracts. The problem is that some of these entities are not physical entities, let alone legal entities, and unlike Coinbase have neither the structure nor the means to contribute to the US tax system, as this law would like.
The crypto-saving amendment to the Infrastructure Bill
In her speech in the Senate, Cynthia Lummis explained that her amendment is necessary for the US to maintain its position as a leader in the global economy:
“America is a country of innovators. Right now our financial system is evolving before our eyes. Distributed ledgers, digital assets and other forms of financial technology are in the early stages of transforming the way we share and store value. These technologies have the potential to create a vast new economic opportunity, reduce systemic risk in our economy and provide for faster payments and create a more inclusive financial system.
America’s leadership in the global economy is a privilege, not a right. Europe, China, Singapore and other nations have a headstart on the United States in implementing financial technology and integrating it into their economy”.
She then explained the content of her amendment:
“It is very simple, it clarifies in law what most of us already believe—that validators of distributed ledger data like miners & stakers, hardware wallet providers & software developers should NOT be required to report transaction data to the IRS”.
Finally, she concluded:
“This amendment is the first step in a long journey towards America renewing its commitment to innovation and retaining its role as the leader in the global economy”.
The other amendment
However, there would be another amendment that opposes this and threatens to scuttle it. Although no text is available, it seems that this version leaves the door open to a possible greater inclusion of entities in the definition of crypto brokers.
The Infrastructure Bill aims to overhaul the tax system in order to raise more revenue for the state.
It obliges crypto service providers to report transaction data to the IRS. But in an industry where decentralization reigns, not all players are equipped for this.
Negotiations are ongoing, but if Cynthia Lummis’ amendment is not passed, the crypto sector in the US would face serious difficulties in complying with the tax rules.