Crypto tax: US bill heads for Senate vote

US legislators are due to vote on Tuesday on a bill that will add provisions to tax cryptocurrency and other digital assets to a massive infrastructure bill. On Sunday night, Jake Chervinsky, general counsel to open finance blockchain firm Compound Labs, tweeted that the US Senate had voted to end a debate on the provisions, although amendments could still be proposed and passed with unanimous consent before Tuesday’s final vote. READ: Bitcoin slides as China's central bank reiterates intention to crackdown on crypto The controversial proposals include the introduction of a legal classification of crypto ‘brokers’ in US law, however, the broad wording of the text could potentially be assigned to multiple actors across the crypto sector including miners, stakers, software developers and network validators. The broad language means all of these participants would be subject to third-party tax reporting requirements despite having no personal information regarding their counter-parties. While amendments have been proposed by a trio of US Senators, Pat Toomey, Rob Wyden and Cynthia Lummis, to limit the definition to exclude miners, validators and software developers, Senators Rob Portman, Mark Warner and Kyrsten Sinema have proposed a counter-amendment to exclude only miners, proof-of-stake validators and wallet providers. Both sides of the amendment debate are now locked in an impasse over which option is preferred, as well as the amount of time allotted to debate them in the chamber. As a result, the provision is currently heading for a final vote in its unaltered form, which if passed could cause havoc in the crypto sector. The tax proposals, which were originally unveiled last month, are aiming to raise around US$28bn to help fund the massive infrastructure bill making its way through Congress. The additional revenues will be put towards a US$550bn investment in transport and electricity infrastructure that has been hashed out by Republicans and Democrats in Congress as part of a larger US$1 trillion spending package. Aside from introducing the legal definition of a crypto broker, the bill will also introduce tighter rules on businesses handling crypto as well as widen reporting requirements. Additionally, any digital asset transactions worth more than US$10,000 will need to be reported to the Internal Revenue Service (IRS). The new proposals, if passed, with market another step in the tightening of the regulatory noose around the crypto industry, which has attracted increasing levels of scrutiny from regulators and politicians amid concerns of its volatility, security, and effect on the wider economy. However, traders seemed unphased in lunchtime trading on Monday, with Bitcoin up 2% in the last 24 hours at US$45,525.