Infrastructure bill and crypto
mark94
Arizona
Monday, August 2, 2021 2:39 PM
To pay for $28 billion of the total, the infrastructure bill includes a provision to expand the definition of a broker for tax purposes to cover “any person who (for consideration) is responsible for and regularly provides and services effectuating transfers of digital assets.”
In practice, this means that crypto miners, validators on proof-of-stake networks, and possibly even those active in decentralized finance markets (think liquidators or governance-token holders) will have to meet IRS reporting requirements and file 1099 forms. These forms include customer data such as name, address, and tax identification number (which, in the case of self-employed individuals, can be a social security number).
The ostensible reason for the provision is to ensure people pay taxes on their crypto earnings—legislators reckon that it can lead to $28 billion more in payments—but it ratchets up financial surveillance to ensure such a result.
Jake Chervinsky, general counsel at DeFi lending protocol Compound, tweeted, “It’s literally impossible for non-custodial actors like miners to get the information they need to do Form 1099s. In practice, this could mean a de facto ban on mining in the USA.”
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