Crypto miners and stakers catch a break with exemption from harsh US tax reporting
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There’s been a positive development regarding the controversial crypto-tax-related provisions in the US$1 trillion infrastructure bill that was signed into law by President Joe Biden last November.
There was no small amount of genuine FUD (fear, uncertainty and doubt) last year surrounding the unclear tax rulings and the long-term effect they could potentially have on stifling the crypto industry in the US.
But, in what looks like shaping as a major legal win for crypto advocates and lobbyists, the US Treasury has now indicated that crypto miners, and other “ancillary parties” will be spared from tax-reporting rules that would have been nigh-on impossible to meet.
As reported by Bloomberg late last week, a Treasury letter was sent to a group of senators including Republicans Pat Toomey, Rob Portman and Cynthia Lummis, among others.
The letter stated that the miners, stakers and various other market participants would no longer be classified as “brokers” under a fresh amendment. This means these market players will no longer be required to share data on their clients’ transactions with the Internal Revenue Service.
Appreciate the Treasury Department affirming that crypto miners, stakers and those who sell hardware and software for wallets are not subject to tax reporting obligations.
As I have said from the start, this requirement only applies to brokers. pic.twitter.com/k5l6kDs4iA
— Rob Portman (@senrobportman) February 12, 2022
In the letter, Treasury Assistant Secretary for Legislative Affairs Jonathan Davidson wrote that the department’s position is that “ancillary parties who cannot get access to information that is useful to the IRS are not intended to be captured by the reporting requirements for brokers.”
Crypto validators are also “not likely to know whether a transaction is part of a sale,” clarified Davidson. And he confirmed that entities involved in offering services related to hardware or software crypto wallets “are not carrying out broker activities.”
In a week that’s begun with market fears regarding geopolitical tension and extreme caution over the US Federal Reserve’s next inflation-combatting move, this is a good win for the world’s biggest crypto market, and a win for legal clarity.
I've seen the letter and this is correct. Just as significant, the Department also states it 'usually announces in a notice of proposed rulemaking when it intends to modify existing regulations'. Important they do so here. All good news. https://t.co/62BL34PIxv
— Jerry Brito (@jerrybrito) February 11, 2022