“Biden admin thinks ‘regulation is the answer’ to crypto” Fox Business Video Clip
February 7, 2022
On February 7, 2022, Jordan Ramis Attorney Gregory Zerzan joined Maria Bartiromo on Fox Business Network to discuss cryptocurrency.…
On Monday, November 15, 2021, President Biden signed into law the “Infrastructure Investment and Jobs Act,’’ providing hundreds of billions of dollars of new federal spending on public works projects like road and bridge construction, harbor maintenance, and water facilities. The law also includes a provision related to the reporting of cryptocurrency transactions and other electronic representations of value. This new provision amends the Internal Revenue Code to provide that “digital assets” are to be treated as securities or, alternatively, cash, for various reporting requirements, and imposes new requirements for “brokers” to submit returns when a digital asset is transferred.
When the digital asset provision was originally proposed, it generated almost immediate opposition from many in the cryptocurrency community, who objected to what they characterized as vague and overreaching terms in the proposed language. These concerns were echoed by a bi-partisan group of United States Senators, who cobbled together an amendment designed to address some of the issues. However, owing to last minute procedural wrangling in the Senate, the amendment was not adopted, leaving the original language to remain in the bill that has now become law.
The law amends Section 6045(c)(1) of the Internal Revenue Code of 1986 to include in the definition of a “broker” “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.’’ Critics have asserted that by including “any person . . . regularly providing any service . . .” the definition could be understood to include miners, developers, and, in the most extreme reading, even internet service providers.
Under the new provision, brokers are required to send a return to both the IRS and the person on whose behalf the transfer of the digital asset was effectuated. For purposes of the law, “digital asset” means “any digital representation of value which is recorded on a cryptographically secured distributed ledger or any similar technology . . . .” As with the rest of the provision, the meaning and requirements will be further defined by the Secretary of the U.S. Treasury through rulemaking, but at the very least it should be expected to include most cryptocurrencies and non-fungible tokens.
Another provision of the new law amends Section 6050I of the Internal Revenue Code. That provision generally imposes a reporting requirement on entities that receive more than $10,000 in cash and equivalents. Under the new law an entity that receives cryptocurrency as payment, for instance, a car dealership that accepts bitcoin, will be required to report information about the customer to the IRS such as the individual’s name, social security number, and address.
Failure to comply with the requirements of Sections 6045 and 6050I can result in substantial penalties, including potential criminal liability.
Fortunately for those concerned about these new provisions, the law provides that they do not apply until 2024. For those interested in the application of the new law, the rulemakings that will implement the provisions, or in the expected legislative efforts to make changes[1], Jordan Ramis attorneys stand ready to provide assistance.
Gregory Zerzan is an attorney with Jordan Ramis PC. Zerzan has served in a wide range of roles in the U.S. government, including as Acting Assistant Secretary of the U.S. Treasury; Counsel to the House Committees on Agriculture, Financial Services, and Energy and Commerce; and as Principal Deputy Solicitor of the U.S. Department of the Interior. Contact him at greg.zerzan@jordanramis.com or (503)-598-7070.
[1] Indeed, one such initiative has already been introduced; on November 18, 2021, Representatives Patrick McHenry (R-NC) and Tim Ryan (D-OH) introduced the Keep Innovation in America Act to change the new law.
Tags: Governmental Services, Local Governments and Special Districts, Financial Services
Also Of Interest
