senators propose definition miners software infrastructure

“Brokers” of “Digital Assets”

Internal Revenue Code Section 6045 generally imposes information reporting requirements on those “doing business as a broker” with respect to sales on behalf of customers. The infrastructure bill amends these rules to include in the definition of broker “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.” For this purpose, a “digital asset” means “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology.”‘ The Secretary of the Treasury is authorized to determine what else constitutes “similar technology.”

Based on bill’s imprecise wording, various noncustodial blockchain technology providers may represent “brokers” subject to reporting obligations.


A debate over competing amendments to regulate cryptocurrency is creating a new hurdle for the Senate to complete work on a $1.2 trillion bipartisan infrastructure bill.

An amendment offered by two Republicans and the Democratic chairman of the Senate Finance Committee has stirred controversy and provoked opposition from the White House.

The amendment, which would carve out exemptions from the cryptocurrency reporting requirements outlined in the infrastructure bill, is sponsored by Senate Finance Committee Chairman Ron Wyden (D-Ore.) and Sens. Cynthia Lummis (R-Wyo.) and Pat Toomey (R-Pa.).

The White House supports a different amendment put forward Thursday by Sens. Rob Portman (R-Ohio), Mark Warner (D-Va.) and Kyrsten Sinema (D-Ariz.).


A trio of U.S. senators is proposing a legislative exclusion for crypto companies, including miners and software developers, from a tax reporting provision in a long-in-the-making bipartisan infrastructure bill.

The Wyden-Lummis-Toomey amendment, made public Wednesday, comes days after it first emerged that the trillion-dollar infrastructure bill included language aimed at tightening reporting requirements for “brokers” in the digital asset space. But critics quickly highlighted the vague language used in the provision, which they said could subject companies not involved in the actual brokerage of digital assets to overly burdensome regulation.

The push to amend the existing language won some key allies in the Senate in the days that followed, resulting in today’s Senate amendment.

Senators propose definition miners software infrastructures

Three American Senators, including Oregon Senator Ron Wyden, Wyoming Senator Cynthia Lummis, and Pennsylvania Senator Pat Toomey, have proposed an amendment to the controversial Infrastructure Bill.

The bill initially classified some crypto entities, including miners, as brokers with the need to report transactions worth $10,000 and above to the Internal Revenue Service (IRS).

However, the amended version proposes that the definition of a broker does not include anyone in the business of “validating distributed ledger transactions,” “developing digital assets or their corresponding protocols,” or dealing with mining software or hardware.

Opponents argue that the bill’s sweeping language could amount to a ban on crypto mining in the United States and drive critical technology development overseas.

Back to Basis

Under Notice 2014-21, the IRS currently classifies cryptocurrency as property for tax purposes. Upon a realization event, any related capital gains and losses are subject to income tax and reporting requirements. However, crypto exchanges have not consistently issued the IRS or taxpayers sufficient information on a cost basis, as needed to complete Form 8949 and Schedule D for these asset sales.
Instead, cryptocurrency investors and traders bear the responsibility for cost basis tracking on their own transactions to file taxes.

Instead, the phrase “any digital representation of value recorded in a cryptographically secured distributed ledger or similar technology specified by the minister” was used to describe cryptocurrencies and other digital assets. According to the bill, crypto miners would fall under the category of “brokers” and are still subject to tax.

Bitcoin senators want to revise the bill

A team of three senators, unofficially referred to as “crypto senators” and led by Wyoming Senator Cynthia Lummis, have filed an amendment that would explicitly clarify the term “broker” and call for crypto miners to be excluded from that category. Wyoming’s Lummis, Oregon’s Ron Weyden and Pennsylvania’s Pat Toomey understand that the bill’s definition of brokers includes only crypto exchanges and excludes miners or manufacturers and distributors of mining equipment and software.

Basis discrepancies between third-party reporting forms and tax returns have also triggered erroneous IRS notices on crypto sales in recent years.

In drafting the bill’s reporting provision, lawmakers intended to cover crypto exchange platforms under a standardized Form 1099 regime with corresponding penalties—like traditional stock brokerages. These platforms would be required to report the adjusted basis and character of gain or loss on a user’s sale of digital assets, including cryptocurrencies such as Bitcoin, Ethereum, or XRP. In itself, the incorporation of cost basis functionality would present a significant challenge to exchange systems.

We are grateful to Chairman Wyden for his leadership in pushing the Senate to address this issue, however we believe that the alternative amendment put forward by Senators Warner, Portman, and Sinema strikes the right balance and makes an important step forward in promoting tax compliance,” Bates said in a statement.

The cryptocurrency industry, however, broadly supported the Wyden amendment, and is bashing the alternative that the White House is supporting.

The Blockchain Association tweeted Thursday urging supporters to call their senators to vote “yes” for the Wyden, Toomey and Lummis amendment, and the association released a statement Wednesday including more than 100 stakeholders in the cryptocurrency ecosystem urging Senate leaders to support it.

It has more narrow exemptions on the proposed regulations of the industry.

“The Warner-Portman-Sinema amendment provides a government-sanctioned safe harbor for the most climate-damaging form of crypto tech, called proof-of-work. It would be a mistake for the climate and for innovation to advance this amendment,” Wyden tweeted.

The infrastructure bill lays out reporting requirements for cryptocurrency that would help fund the roughly $1 trillion bill. The requirements could raise $28 billion over 10 years, according to the Joint Committee on Taxation.

But cryptocurrency companies and industry groups raised concerns that the broad definition of “broker” in the bill would also impose requirements on so-called cryptocurrency miners.

The Warner, Portman and Sinema amendment would instead amend the bill more narrowly to create exemptions for “proof-of-work” miners.

Proof of work is a widely used method in cryptocurrency, including bitcoin, for validating transactions and mining new tokens. It requires members to solve a math puzzle to validate transactions. But emerging competitors to bitcoin may require less energy-intensive, decentralized methods for validation that could fall subject to the reporting requirements based on the Warner, Portman and Sinema amendment.

White House spokesperson Andrew Bates said the administration supports Warner, Portman and Sinema’s amendment, which “strikes the right balance.”

“The Administration believes this provision will strengthen tax compliance in this emerging area of finance and ensure that high income taxpayers are contributing what they owe under the law.

Key Points

  • The Infrastructure Investment and Jobs Act (H.R. 3684) passed the Senate with a broad definition of “broker” to target cryptocurrency information reporting to the IRS.
  • Absent amendment, the bill imposes obligations similar to IRS Form 1099-B on various technology providers in the crypto industry, even if they do not broker digital asset transactions and lack the necessary information to comply.

On August 10, 2021, the Senate voted 69 to 30 to pass the Infrastructure Investment and Jobs Act. To help fund the spending package, Section 80603 of the bill introduces heightened tax reporting requirements on cryptocurrency and other digital asset transactions. Despite widespread industry outcry, the controversial provision advances to the House of Representatives with its expansive definition of “broker” intact.

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