US President Biden signed the “Infrastructure Investment and Employment Act” on Monday. The definition of crypto brokers will be handled by the U.S. Department of the Treasury. At this point, the United States has entered a new round of discussions around the controversial definition of encryption “broker”. The definition of a broker will face the process of formulating rules within the Ministry of Finance.
It is understood. This $1 trillion infrastructure bill aims to provide funding for major infrastructure projects. Before the passage of the bill, legislators added wording applicable to cryptocurrencies, which involved the taxation of cryptocurrencies, which attracted the attention of cryptographers. It is estimated that in the next ten years, 28 billion U.S. dollars in taxes will be generated in the field of cryptocurrency.
After the bill was introduced, the Ministry of Finance also emphasized the new goal of expanding cryptocurrency tax filing requirements to combat tax evasion.
Tax evasion of crypto assets is a problem.
The Treasury Department believes that the global nature of the crypto market provides American taxpayers with an opportunity to conceal assets and taxable income through the use of offshore crypto exchanges and wallet providers.
The Ministry of Finance proposes to disclose information about cryptocurrency brokers.
To report the beneficial owner of the account, and then incorporate it into the automatic international reporting network. The proposal aims to make this requirement mandatory in tax returns filed starting in 2023.
Encryption taxation is already on the agenda. But what has always caused controversy is that in this bill, the “broker” of cryptocurrency is clearly required to report transaction-related information to the tax authority, and the definition of “broker”. It is “anyone who facilitates digital asset transactions on behalf of others”.
Network participants such as node operators are required.
It is clearly unrealistic to report encrypted transaction identification information that they cannot collect. Therefore, the definition of “broker” in the bill is too broad and vague. Previously, a number of parliamentarians have asked for changes to its definition.
After the bill is passed, the U.S. Inland Revenue Service (IRS) will begin to formulate detailed rules for the implementation of relevant information. Therefore, even if the bill follows the current wording, as far as IRS is concerned, the problem of the definition of “broker” still needs to be resolved.