Thread by @nikhileshde

THREAD: Crypto has fully arrived in DC, with a bipartisan, trillion-dollar infrastructure bill containing a crypto tax reporting provision.

I’ll try to clarify some misconceptions.

Here’s what’s happening and how we got here:

coindesk.com/how-controvers…

2/ On July 28, a draft version of the crypto rule in the bill expanded the definition of a “broker” w/r/t the crypto industry.

It included anyone who provides a service/app for a digital asset transfer, including non-custodial/P2P services and DEXs:

coindesk.com/new-infrastruc…

3/ By that definition, “broker” could mean wallet developers, software engineers, DAO token holders, miners and other parties that don’t have customers the way a trading platform does.

That would entail specific tax information reporting rules:

coindesk.com/new-infrastruc…

4/ To be clear: There is no new tax being imposed.

It’s an expansion of how a “broker” is defined, which would better clarify the IRS’ jurisdiction for collecting this information:

coindesk.com/new-infrastruc…

5/ Critics say that while exchanges can comply with the crypto provision, these other types of businesses simply don’t have the info they’d need to:

coindesk.com/new-infrastruc…

6/ On Aug. 1, the final draft language was published in the 2,700-page infrastructure bill.

This version dropped language around “noncustodial” entities and decentralized exchanges:

coindesk.com/updated-infras…

7/ A spokesperson for @senrobportman - who I’m told inserted the provision - told @CoinDesk that the intent isn’t to capture “non-brokers, such as software developers and crypto miners, to comply with the IRS reporting obligations”:

coindesk.com/updated-infras…

8/ But when I asked if the provision would be included in the legislation or in some form of legislative intent, another spokesperson said @senrobportman’s statement was only for “press purposes”:

coindesk.com/updated-infras…

9/ This provision was apparently so contentious that it helped delay the overall infrastructure package’s introduction to the Senate floor.

(This was also part of the reason we didn’t see any votes last night, I’m told.)

coindesk.com/how-controvers…

10/ The $28 billion figure the provision is supposed to generate came from the Joint Committee on Taxation, but it was unclear how the group scored this provision.

A JCT representative told me it wouldn't publish the methodology:

coindesk.com/how-controvers…

11/ Sens. @RonWyden, @SenLummis and @SenToomey proposed an amendment that would carve out the specific non-custodial (“non-broker”) types of businesses from the language in the overall infrastructure bill:

coindesk.com/crypto-tax-exe…

12/ The JCT reportedly said this might reduce the amount of revenue generated by about $5 billion:

coindesk.com/crypto-tax-exe…

13/ @senrobportman, who has defended the crypto provision’s original language, later said he agreed that the intent of the language could be clarified:

coindesk.com/sen-portman-an…

14/ Later, @MarkWarner, @senrobportman and @SenatorSinema introduced their own amendment on the provision, which carves out Proof-of-Work validators (miners) but not other types of validators (ie Proof-of-Stake).

The @WhiteHouse supports this effort:

coindesk.com/senator-who-wr…

15/ The Senate will reconvene at 11 a.m. ET tomorrow (Saturday). I’m told that there will likely be a cloture vote around noon, followed by possible votes on various amendments, including both of the crypto-related ones.