Crypto community wary of another amendment to the US infrastructure plan

An amendment to section 6050I of the U.S. tax code would require recipients of digital assets over $10,000 to verify the sender’s personal information. This was reported by Abraham Sazerland of Proof of Stake Alliance.

An amendment to section 6050I of the tax code imposes a new surveillance and reporting requirement on users of “digital assets”. This is NOT the much-discussed “broker” provision (tax code section 6045) that provoked opposition in the Senate.

— Abraham Sutherland (@abesutherland) September 17, 2021

Currently the U.S. tax code requires recipients of more than $10,000 in cash to report the names and Social Security numbers of counterparties within 15 days. The infrastructure plan would extend these requirements to cryptocurrencies, the expert noted.

Sazerland emphasised that violations of section 6050I carry criminal penalties up to five years in prison.

All other tax code reporting violations are misdemeanors, but violation of 6050I can be a felony (up to five years in prison).

— Abraham Sutherland (@abesutherland) September 17, 2021

Sazerland explained that the provision violates privacy and demands the impossible, as did the controversial broker-status amendment. The latter, as originally drafted, would require reporting to the IRS on the activity of users who provide cryptocurrency transfer services and receive compensation for doing so.

With the right interpretation, such requirements could extend to miners and node operators on blockchains, wallet developers, DeFi protocol liquidity providers and other non-custodial players.

Senators Ron Wyden, Cynthia Lummis and Pat Toomey proposed to exclude participants in the crypto industry from the bipartisan plan. Their colleague Rob Portman put forward a counterproposal, exempting only miners and sellers of hardware or software. If his proposal were adopted, the status of PoS validators would remain unclear.

On August 9, Democrats, Republicans and the Treasury Department reached a compromise, but the corresponding amendment did not receive unanimous support — opposed by the 87-year-old Richard Shelby.

On August 10, the U.S. Senate sent a document to the House of Representatives with no cryptocurrency amendments. As CNBC reports, citing a Treasury official, the department does not intend to broadly interpret the definition of “broker” to industry participants, even if the infrastructure plan is adopted unchanged.

Earlier the U.S. Congress kept in force the amendments to the tax-reporting loopholes in crypto-transaction reporting in the second infrastructure plan worth $3.5 trillion.

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