Treasury says crypto miners are immune from IRS reporting

The US Treasury has confirmed that crypto miners and wallet operators are exempt from the IRS’s reporting requirements, and is working on the necessary regulations.

The cryptocurrency industry in the United States is on the verge of a major legal victory, with the US Treasury Department planning to exempt crypto miners and other “ancillary parties” from tax reporting requirements.

The US Treasury announced on Friday that it plans to exempt crypto miners, stakers, and other market participants from laws that would require crypto brokers to share data on their clients’ transactions with the Internal Revenue Service in a letter to a group of senators.

“It’s great to see the Treasury Department confirm that crypto miners, stakers, and those who provide hardware and software for wallets are not subject to tax reporting duties,” Ohio Republican Senator Rob Portman tweeted.

Treasury Assistant Secretary for Legislative Affairs Jonathan Davidson stated in the letter that “ancillary parties who cannot obtain information that is helpful to the IRS are not intended to be caught by the reporting requirements for brokers,” according to the letter.

Crypto validators are “unlikely to know if a transaction is part of a sale,” according to Davidson, while organisations providing services connected to hardware or software crypto wallets “do not engage in broker operations.”

According to the letter, the Treasury would also investigate “whether other companies in the digital asset market, such as centralised exchanges and those sometimes labelled as decentralised exchanges and peer-to-peer exchanges, should be classified as brokers.”

According to Bloomberg, the Treasury Department intends to submit draught regulations that include its position on the broker term.

President Joe Biden signed the $1 trillion infrastructure bill in mid-November 2021, mandating crypto market participants to register all digital asset transactions costing much than $10,000 to the IRS, as previously reported.

In December, several senators, notably Pennsylvania Republican Pat Toomey, Oregon Democrat Ron Wyden, and Wyoming Republican Cynthia Lummis, encouraged the Treasury to clarify the definition of broker in the infrastructure law, with the intention of introducing related legislation. In November, a handful of House Democrats backed a similar plan.

 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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