Miners and stakers may not be required to report to the Internal Revenue Service
The US Treasury says there is to plan frees miners and stakers from complicated regulations that require digital asset brokers to provide their transaction information to the IRS.
The decision was made in a letter to a group of senators on Friday. This is seen as a major victory for the cryptocurrency market in a battle that has been going on since last year when users were asked to report trades under a bipartisan infrastructure law.
In the letter, Deputy Treasury Secretary for Legislative Affairs Jonathan Davidson said the department’s position was that “auxiliaries who do not have access to useful information from the IRS need not proceed with reporting to brokers.” This means that miners or staking participants to validate cryptocurrency transactions, as well as software and hardware providers, can avoid reporting requirements.
The broker plays a very important role as it forces companies to collect and disclose detailed information about customers including names and addresses, total earnings from sales and any profits or holes.
In the cryptocurrency industry, certain groups of people such as miners and stakers do not have access to this information, making compliance difficult or even impossible.
The Treasury Department intends to issue the proposed regulations in the future and reflect its thinking on the broker definition, Davidson said. The letter, consistent with the department’s position, includes comments from Senators such as Mark Warner, Democrat, Virginia, and Rob Portman, Republican, Ohio.
The Treasury Department’s move helps allay some of the concerns once expressed by executives at crypto companies like Block Inc. (formerly Square Inc.) and Coinbase Global Inc., as well as major associations such as the Blockchain Association and Coin Center.
Several senators, including Warner and Portman, have sought to change the brokerage clause in the legislative process. A change seemed likely when they reached a last-minute deal with the Biden administration, but the attempt ultimately fell through, requiring the support of all 100 senators, as Richard Shelby of the Republican Party, Alabama, opposed the change independent dispute over military spending.
Since then, pressure to clarify reporting requirements has shifted to the Treasury Department, which is tasked with interpreting the law through regulations.
There are other issues the Treasury Department is still considering, Davidson said, including whether other parties in the digital asset market, such as centralized exchanges and peer-to-peer exchanges, should be considered as brokers.
Sen. Pat Toomey, a Republican on the Senate Banking Committee who was involved in efforts to change the Infrastructure Act last year, said in an emailed statement that he supports the decision outlined in the Treasury Department’s letter but still wants that the legislature passes legislation to codify the problem.
Join CoinCu Telegram to keep track of news: https://t.me/coincunews