An updated version of the massive bipartisan U.S. infrastructure bill that seeks funding through taxes on cryptocurrency transactions tweaks the definition of “broker” as it relates to those transactions, ahead of a potential vote later this week. Bitcoin stocks were mixed.
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The change, reported by CoinDesk on Sunday, appeared to narrow the definition of “broker” down to people who handle digital asset transfers.
An earlier version of the bill would have widened that definition to include anyone who facilitated transfers of digital assets, including decentralized exchanges and peer-to-peer marketplaces. That language alarmed many in an industry that has gained in popularity in the pandemic era.
The version of the bill released Sunday offers a “clarification” of the definition of a broker. It now includes “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”
Jerry Brito, executive director of Coin Center, a crypto think tank, tweeted that the new language was an improvement, but still vague enough to broadly applied.
“It’s better than where it started, but still not good enough to clearly exclude miners and similarly situated persons,” he said. Miners are involved in the creation of cryptocurrency and the upkeep of the blockchain on which transactions take place.
Brito added that “the latest language can still be interpreted by Treasury to cover miners, lightning nodes, and the like. If that’s not Congress’s intent, there are easy fixes they can adopt. There’s still time.”
The price of Bitcoin fell 5% to $39,126. Among Bitcoin stocks, Coinbase (COIN) dipped 0.5%. Marathon Digital Holdings (MARA) rose 2.2%. Meanwhile, Riot Blockchain (RIOT) added 1.5%. The Grayscale Bitcoin Trust (GBTC) slipped 3.4%.
The price of Bitcoin and Bitcoin stocks have slid this year as China cracks down on crypto-related activity.
‘Major Legal Change’ for Bitcoin Stocks?
The Senate last week voted to start working on the $1 trillion infrastructure bill, after weeks of negotiations between lawmakers in the chamber and the White House. The bill would put billions toward efforts to improve things like roads, ports, Internet service and electric-vehicle charging stations.
However, the bill would also plan to strengthen tax enforcement and reporting requirements on cryptocurrencies, which regulators have worried can be a vehicle for tax evasion. The Joint Committee on Taxation has estimated the extra measures could bring the government $28 billion over 10 years, according to the New York Times.
Michelle Bond, CEO of the Association For Digital Asset Markets, said in a recent statement that Washington’s decision to seek revenue from the digital-asset industry was a sign of its health and growth.
However, she added that “the Senate language to tax digital assets essentially declares digital assets as securities for purposes of the tax code — a major legal change proposed in just a matter of weeks without having consulted with market participants or considered the ramifications.”
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