
- A group of U.S. lawmakers have raised concerns about proposed tax reporting rules.
- The lawmakers faulted the treasury for its โunworkable definitionsโ of some terms.
- Per the lawmakers, the proposal would inhibit innovation in the crypto ecosystem.
A group of U.S. Congress members led by the Financial Services Committee’s Chairman of the House, Patrick McHenry, have expressed concerns about the crypto tax regime enshrined in the Infrastructure Investment and Jobs Act.
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In a November 10 bipartisan letter addressed to the Assistant Secretary U.S. Department of the Treasury, Lily Batchelder, the lawmakers argued that the tax reporting requirements on digital asset market participants are โunworkable as writtenโ and would inhibit innovation.
Concerns About โUnworkable Definitionsโ
Notably, the lawmakers faulted the Treasuryโs definition of โBroker,โ arguing that the standard was too broad and would encompass entities that do not embody the characteristics of a traditional broker, such as decentralized finance (DeFi) protocols.

According to the lawmakers, DeFi protocols will be caught up in the treasuryโs extrapolated definition of โBroker,โ which reads “persons that are in the position to know the identity of the party.โ
โThis new interpretation will sweep up DeFi protocols in the definition of broker because the โposition to know standardโ encompasses more entities compared to the โordinarily would knowโ standard. There is no evidence indicating DeFi protocols โordinarily would knowโ the identity of the party.โ The letter read.
Further, the lawmakers submitted that the Treasuryโs definition of a broker would cause crypto-focused companies to file duplicative reports to both the Internal Revenue System (IRS) and the American taxpayers.
Lawmakers believe this is unnecessary and would only raise the IRSโs cost of doing business while inundating the agency and American taxpayers with unnecessary information.
Based on these and other arguments, the lawmakers had specific requests, including urging the Treasury to revise and extend the regimeโs implementation period.
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