The United States Treasury Department, which controls both the Internal Revenue Services (IRS) and the Financial Crimes Enforcement Network (FinCEN), is preparing to provide added guidance on the new crypto tax reporting rules. According to a Bloomberg report, the department will clarify which companies are considered brokers and in turn, ask them to comply with the newly approved ruleset.
The cryptocurrency industry was thrown into turmoil recently after lawmakers in the US unveiled a tax scheme for digital assets. What caught the attention of many was the broad usage of the term broker, which in its current state is applicable to just about anyone who deals with virtual currencies.
However, regulators in the country have now signaled that they may not apply the term broker as liberally as expected. In fact, the Treasury Department has indicated that it would review a firm’s activities to determine whether it qualifies as a broker under the tax law. This is a huge relief for crypto developers, miners, and hardware and software providers who’ll be exempt from the rules.
With the release of new guidance next week, regulators are attempting to address the concerns of digital asset-focused companies, who will contribute an estimated $28 billion to the funds required by the trillion-dollar infrastructure deal.
Several crypto proponents had argued that the language used in rules was detrimental to the growth of the industry. America’s Blockchain Association and other lobbyists had even declared their intent to push for a revision of the provisions. Meanwhile, politicians like Senator Ted Cruz blasted their colleagues for destroying people’s livelihood due to utter ignorance.
Earlier today, Politico’s Victoria Guida shared a tweetstorm explaining the intent behind the language of crypto tax rules. Based on her conversations with an official, Guida learned that the IRS was already drafting regulations for the industry, but the bill provided an iron-clad authority to the agency.
She added that the agency was not really interested in non-brokers, but did not want to exclude anyone in the market. Furthermore, she highlighted that the regulations were supposed to be future-proof.