Jery Brito in response to the US Infrastructure bill stated:  The new bipartisan infrastructure bill in the Senate includes new tax reporting obligations for crypto.

Unfortunately, in the drafts we’ve seen, the category of persons who would be obligated to report is so broad that it potentially covers persons who only provide software or hardware to customers and who have no visibility whatsoever into users’ transactions.

It potentially also covers miners and DEXs. The saving grace is that arguably miners (and DEXs for that matter) do not have “customers” as defined in the tax code.

We’ve been engaged with the relevant staff who worked on this over the past few months, but the problem is that this language was a last minute addition to a must-pass bill.

We worked all day yesterday trying to fix and will continue to do so today. Stay tuned.

The deal with the US Infrastructure bill goes as published by Jake Chervinsky:

A new provision has been added that expands the Tax Code’s definition of “broker” to capture nearly everyone in crypto, including non-custodial actors like miners, forcing them all to KYC users.  This is not a drill.

The bill expands the definition of a “broker” to include “any person who (for consideration) is responsible for and regularly provides any service effectuating transfers of digital assets.” Earlier drafts said “even if non-custodial” & explicitly included DEX & P2P markets.

This definition is so broad, it could apply to nearly every economic actor in the US crypto industry, if read literally. That includes PoW miners & PoS validators, since “providing a service to effectuate transfers of digital assets for consideration” seems to fit both.

It might include a huge range of DeFi market participants too, like DEX LPs, liquidators, protocol governors, etc. Depending what “for consideration” means, it might also extend to non-economic actors like node operators or wallet developers. The scope here could be massive.

The Tax Code requires brokers to comply with IRS reporting requirements. Most importantly, they have to give Form 1099s to their customers & file them with the IRS too. To fill out Form 1099s, brokers have to collect customer data including name, address, phone number, etc.

This means brokers have to KYC customers to comply with IRS reporting requirements. As a result, the provision functions as a surveillance mandate, just like the one Sec. Mnuchin proposed in the final days of the Trump administration. As before, this is a very bad idea.

As those who understand crypto already know, users are pseudonymous & access is permissionless. 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.

This sounds insane, but it really might happen. Most crypto legislation goes nowhere, so it’s easy to ignore. Not this time. This provision is part of the bipartisan & otherwise popular infrastructure bill, which is moving quickly through Congress & is highly likely to pass.