The U.S. Senate has rejected a bipartisan amendment to the $1T infrastructure bill that would have ring-fenced cryptocurrency tax-reporting requirements, creating potential headaches for crypto companies.

Why should we care?
The amendment, presented by Sens. Pat Toomey (R-Pa.), Cynthia Lummis, (R-Wyo.), Kyrsten Sinema (D-Ariz.), and Rob Portman (R-Ohio) clarified the definition of a broker who would be required to report crypto gains to the Internal Revenue Service (IRS). Under the amendment, reporting requirements would be required for traditional brokers, or “businesses who conduct transactions on exchanges where consumers buy, sell, and trade digit assets." It would leave out intermediaries like miners, network validators, and other service providers. The amendment is in keeping with the crypto industry’s contention that the current definition of a broker – “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person” – is too far-reaching. Crypto advocates argue that non-financial intermediaries that never take control of a consumer’s assets could be impacted by the current (broad) definition of a broker. These actors that don’t have customers wouldn’t be able to access the information needed to comply, they contend. Industry advocates say the onerous reporting requirements could push innovation overseas. “As written, the infrastructure bill contains harmful IRS reporting requirements that many in the crypto ecosystem lack the capabilities to comply with. As a result, many crypto players will be forced to move overseas, leaving future jobs and economic growth on the table,” the Blockchain Association said in a statement.