On August 3, the updated version of the U.S. Senate’s bipartisan infrastructure bill narrowed the definition of “broker” for the purpose of encrypted taxation, but did not clearly stipulate that only companies that provide services to customers are eligible.

The bill being debated in the Senate provides approximately US$1 trillion in funding for infrastructure improvements across the country, partly to be paid for approximately US$28 billion in taxes generated by crypto transactions.

The early version of the bill sought to increase information reporting requirements and expand the definition of “broker” for tax purposes to include any party that may interact with cryptocurrencies, including decentralized exchanges or other non-custodial service providers. A copy of the current draft bill shows that the updated version of the bill now stipulates that only those who provide digital asset transfers will be regarded as brokers. In other words, the language currently does not explicitly include decentralized exchanges, but it does not explicitly exclude miners, node operators, software developers, or similar parties.

According to the bill, “anyone (for consideration) who is responsible for regularly providing any service for transferring digital assets on behalf of others” is now included in the definition. The core of the problem is the information reporting requirements. The initial version of the Infrastructure Act did not propose a new tax on crypto transactions. Instead, it proposed to increase the types of reports that exchanges or other market participants must provide around transactions.

This means that the bill will enforce existing tax rules for a wider range of transactions. Given that there is no clear operator that can provide such reports, certain types of exchanges (ie, decentralized exchanges) may be difficult to comply with.

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