Mike Crapo

"Section 80603 of the IIJA standardizes information reporting by brokers of digital assets to the Internal Revenue Service (IRS) for tax purposes by modifying Section 6045 of the Internal Revenue Code. The aim of this provision is to provide more certainty for Americans looking to invest in these digital assets, ensuring that crypto investors receive the same tax documents, generally a Form 1099-B, from their brokers that stock tradersreceive, which in turn will enable them to file their taxes more easily and promote higher compliance. This provision is one of the first efforts by the Federal government to better incorporate digital assets, like virtual currency, into our nation’s tax code. Some market participants have expressed concern that an overly-broad interpretation of this provision’s definition of “broker” could capture certain individuals who are solely involved with validating distributed ledger transactions through mining, staking, or other methods, and entities solely providing software or hardware solutions enabling users to maintain custody of their own digital asset wallets. As Senator Portman and Senator Warner articulated in a colloquy on the floor of the Senate on August 9, 2021, “the purpose of this provision is not to impose new reporting requirements on people who do not meet the definition of brokers.” Further, our understanding from both the Administration and the Joint Committee on Taxation is that they shared the same interpretation of the provision as its authors: that the reporting requirements only cover brokers who enable the transfer of digital assets for consideration —and not other parties which are ancillary to the process unless they are serving in an additional capacity as brokers."