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Following lengthy negotiations, the U.S. Congress has passed the $1.2trn Infrastructure Bill that will update the country’s infrastructure. As passed, the act will require certain crypto transactions to be reported for tax purposes.
Late Friday evening, the U.S. House voted on President Joe Biden’s historic Infrastructure Investment and Jobs Act and authorized a $1.2trn spending on rebuilding the U.S.’ roads, bridges, and rails, expanding access to high-speed internet, and tackling the climate crisis.
The bill was passed by the House with a 228-205 vote, following weeks of negotiations within the Democratic Party as progressives were pushing for linking the infrastructure bill to a separate, social spending bill known as the Build Back Better Act.
Both acts are part of President Biden's American Jobs Plan and intend to finance the investments through redirecting unspent emergency relief funds, targeted corporate user fees, and strengthening tax enforcement, which includes cryptocurrencies.
To do this, the bill includes a provision that will expand the definition of a broker for tax reporting purposes.
The infrastructure bill requires digital asset brokers, defined as those responsible for “regularly providing any service effectuating transfers of digital assets on behalf of another person,” to file with the Internal Revenue Service (IRS) annual information returns showing the gross proceeds realized by customers from various sale transactions.
Additionally, the bill adds digital assets to the current rules on cash reporting, requiring businesses to report transactions of more than $10,000. The requirements will apply to returns and statements filed after December 31, 2023.
The provision has been criticized both by the crypto industry and lawmakers for setting the definition of a broker too broad and driving innovation away from the country.
During the debate in the Senate, bipartisan groups of senators submitted various amendments to narrow the scope of the term "broker". These included proposals to limit the reporting obligation to persons who conduct transactions on digital asset exchanges, and to exclude those who engage in mining or staking, and selling hardware or software that an individual may use to control a private key.
However, none of these amendments sufficed, and the Senate passed the bill with the broad broker definition in August.
As the House has now voted to agree to the Senate amendments, the bill, together with the crypto reporting requirements, is now heading to President Biden’s desk for his signature.
Reacting to the passage of the bill, Biden said it is “a once-in-a-generation investment that’s going to create millions of jobs modernizing our infrastructure — our roads, our bridges, our broadband, a whole range of things — to turn the climate crisis into an opportunity. And it puts us on a path to win the economic competition of the 21st century that we face with China and other large countries and the rest of the world.”
