Six senators urge Treasury Secretary to clarify definition of broker in infrastructure law before 2022

According to the U.S. lawmakers, the infrastructure law contains an “overly-broad interpretation” of what a broker is and places the reporting burden on individuals who may not have the necessary information to comply.

A bipartisan group of U.S. senators have called on Treasury Secretary Janet Yellen to clarify the language in the infrastructure bill signed into law by President Joe Biden around the tax reporting requirements on crypto.

In a Tuesday letter, Senators Rob Portman, Mike Crapo, Pat Toomey, Mark Warner, Kyrsten Sinema, and Cynthia Lummis urged Yellen to “provide information or informal guidance” on the definition of “broker” in the recently passed infrastructure law, HR 3684. Under the current wording, people in the crypto space including miners, software developers, transaction validators and node operators are required to report most digital asset transactions worth more than $10,000 to the Internal Revenue Service, or IRS.

However, according to the U.S. lawmakers, the law contains an “overly-broad interpretation” of what a broker is and places an undue burden on certain individuals who may not have the necessary information on transactions to comply. The six said Yellen is empowered to use the Administrative Procedure Act, legislation which determines how federal agencies may develop and issue regulations. In this case, they urged her to provide a set of rules clarifying the definition of a broker “in an expeditious manner,” or no later than the end of the year.

“We ask that you carefully consider the characteristics of the technologies which drive this space, which may include differences in the consensus mechanisms of various distributed ledgers and second layer protocols,” said the six senators. “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.”

Related: US lawmakers introduce bill to ‘fix’ crypto reporting requirement from infrastructure law

The letter is the latest effort by U.S. lawmakers to attempt to modify the tax reporting provision in the infrastructure legislation. Toomey, Lummis, Sinema, Portman, Warner, and others backed a bipartisan agreement on an amendment to do just that when the bill was moving through the Senate in August, but the proposal was derailed by Alabama Senator Richard Shelby seeking to add his own amendment to the bill. Senators Ron Wyden and Lummis also attempted to pass legislation which would have changed the tax reporting requirements to “not apply to individuals developing blockchain technology and wallets” on the same day the bill became law.

“Now that this bill has become law, Congress has a responsibility to ensure that it is implemented effectively and in accordance with congressional intent,” said the six senators.

Portman, Crapo, Toomey, Warner, Sinema, and Lummis added they were “prepared to offer legislation” to clarify the definition of a broker.

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Infrastructure bill set for a vote by Sept. 27 with no changes to crypto tax provisions

The House of Representatives will vote on the controversial infrastructure bill without amendments to its cryptocurrency provisions by Sept. 27.

The controversial $1 trillion infrastructure bill will see a vote in the U.S. House of Representatives without any amendments to the crypto tax provisions by Sept. 27.

The vote was agreed to after the House narrowly approved the Democrats’ $3.5 trillion budget blueprint in a vote of 220 to 212. Despite some initial pushback from moderate Democrats, the dissident voters were swayed after House Speaker Nancy Pelosi committed to pass the bill before Sept. 27. Pelosi stated:

“I am committing to pass the bipartisan infrastructure bill by September 27. I do so with a commitment to rally House Democratic support for its passage.”

In late July, last-minute cryptocurrency provisions were added to the infrastructure bill in a bid to raise a further $28 billion through expanded tax obligations for the crypto sector.

However, the loose language contained in the bill sent shockwaves across the crypto community and analysts believe it will impose stringent third-party reporting requirements on network validators and software developers who would be unable to comply with the newly mandated obligations.

The Senate appeared poised to pass compromise amendments to the bill that would specifically exempt network validators and software developers in early August, but owing to one dissenting Senator the legislation ultimately passed through the Congress without alteration.

However, a Treasury Department official has sought to offer the crypto industry a glimmer of hope, telling CNBC that reporting requirements will not be imposed on entities that are unable to comply.

The anonymous official indicated that the Treasury intends to conduct detailed research to understand which actors within the crypto sector can adhere to the new reporting requirement.

However, the official’s comments were of little comfort to Coin Center executive director Jerry Brito, who emphasized that the bill’s language currently requires reporting on transfers as well as trades. Brito also highlighted that any crypto transaction valued at more than $10,000 will need to be reported to the Internal Revenue Service alongside personal information on the counterparty.

“I appreciate that it seems to be Treasury’s intention to get this right […] but please don’t accept the narrative that folks in crypto are overreacting about this provision,” he added.

Related: Coinbase warns infrastructure bill’s crypto provisions could impact 20% of US population

Commenting on the lack of amendments to the infrastructure bill, executive director of The Blockchain Association, Kristin Smith, described the events as “unfortunate but unsurprising.”

“However, this is not the end of the process,” she stated, adding:

“The Blockchain Association, our 46 member companies and the newly-energized, nationwide crypto community will rededicate our energy to supporting technology-neutral, pro-crypto legislation and regulation — on this specific tax issue as well as broader crypto policy.”

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Coinbase to acquire leading blockchain infrastructure platform, Bison Trails

  • The acquisition will enable Bison Trails to accelerate its mission to provide easy-to-use blockchain infrastructure that strengthens the entire crypto ecosystem.
  • Bison Trails will serve as a foundational element within Coinbase’s ecosystem suite of products, powering all participants in the cryptoeconomy.

Crypto has come a long way since Satoshi’s whitepaper. At Coinbase we believe we are just starting to see a glimpse for the potential of the emerging cryptoeconomy. One of the biggest challenges for builders in the crypto ecosystem today is running reliable, secure and scalable blockchain infrastructure.

Coinbase is committed to providing best-in-class infrastructure to empower current and future builders of the cryptoeconomy. Similar to how in the traditional Web paradigm, reliable managed infrastructure unleashed a wave of innovation, our strategy is to offer turn-key solutions to power distributed and scalable crypto infrastructure, enabling the innovators and builders of tomorrow to do what they do best: build. This will help drive one of the greatest transformations in finance in the last hundred years, and will drive us closer to achieving our mission of creating an open financial system.

It’s for this reason and many more that Coinbase is proud to announce today that we are acquiring Bison Trails, an early pioneer in fully managed blockchain infrastructure whose platform has helped to accelerate the adoption of blockchain technology around the world. Its easy-to-use platform powers billions of transactions for many of the biggest names in crypto today. By joining forces, we aim to bring the advanced technology that the Bison Trails team has developed — and continues to develop — to more projects and more companies around the world. Bison Trails will continue to operate as a standalone product and provide world class services to its current customers, which include some of the most respected names in crypto and financial technology.

Founded in 2018, Bison Trails’ mission is to provide superior infrastructure on multiple blockchains, to strengthen the entire ecosystem, and enable the pioneers of tomorrow. With its Participation product, Bison Trails powers staking and active network participation on ~20 crypto protocols. Bison Trails’ Query/Transact (QT) product makes it easy for anyone building a wide range of Web 3.0 applications to validate transactions, obtain information about them (query), and write data such as transfers or smart contract interactions (transactions).

Bison Trails will continue to build on its current offerings as a foundational element of Coinbase’s ecosystem suite of products. Over time, we plan to extend additional infrastructure and API services that we have developed to power Coinbase products for the benefit of the entire crypto ecosystem.

The Coinbase and Bison Trails relationship started early, with an investment from Coinbase Ventures in late 2019 and commercial partnership with Coinbase Custody in 2020. As we developed a strong working relationship, it became increasingly clear that Coinbase and Bison Tralis have a shared vision of providing best-in-class infrastructure to power the cryptoeconomy. We’ve been impressed with the team’s speed of execution, customer empathy, and pioneering leadership. We are incredibly excited for the Bison Trails herd to join Coinbase.

Our acquisition of Bison Trails represents an important step in delivering on our mission to create an open financial system for the world. In the same way that we simplified access to the cryptoeconomy for individuals and institutions, we will continue developing a suite of products and services to help other companies build protocols and applications, helping to grow the cryptoconomy overall.

This acquisition is subject to customary closing conditions and is expected to close later this year.

Coinbase to acquire leading blockchain infrastructure platform, Bison Trails was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

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