A confirmation from the US Treasury has come in, stating that cryptocurrency miners and wallet operators are free from IRS reporting requirements, while suitable regulations for reporting are underway.
This constitutes a phenomenal synergy and quite the legal victory among the United States and the crypto industry, seeing as the United States Treasury Department intends to free cryptocurrency miners and other ancillary parties from being obliged to abide by the reporting requirements of taxation.
The US Treasury announced on Friday that it intends to exclude cryptocurrency miners, stakers, as well as other market players from regulations that would compel cryptocurrency brokers to disclose information on the transactions of their clientele with the Internal Revenue Service (IRS) in a letter to senators.
Rob Portman, the Ohio Republican Senator took to Twitter to make the following statement: “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.”
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
Jonathan Davidson, the Treasury Assistant Secretary for Legislative Affairs divulged the stance of the department in the letter by confirming 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.”
It is farfetched for crypto validators to actually know when a transaction constitutes a sale according to Jonathan Davidson, and organizations that provide services relating to hardware or software crypto wallets are not engaged in brokering operations.
The letter conveys that the Treasury will take into account “the extent to which other parties in the digital asset market, such as centralized exchanges and those often described as decentralized exchanges and peer-to-peer exchanges, should be treated as brokers.”
According to Bloomberg, the Treasury Department intends to submit draft regulations containing its position on the broker term, which is quite vague at the time being.
US President Joe Biden signed off on the $1 trillion infrastructure bill in 2021, mandating crypto market players to disclose all cryptocurrency and other virtual asset transactions over $10,000 to the Internal Revenue Service (IRS).
In December 2021, many senators, notably Pennsylvania Republican Pat Toomey, Wyoming Republican Cynthia Lummis, and Oregon Democrat Ron Wyden, encouraged the Treasury to specify the meaning of broker in the infrastructure bill. In November, a handful of House Democrats also supported the initiative.