On the recordAugust 9, 2021
I rise today to clarify the provisions in the underlying bill text we are working on this evening. As we know, cryptocurrency is a digital asset that more and more people are investing in, and we should want that to continue in a healthy and sustainable way. I would like to discuss the provisions in the bill that address information reporting requirements for digital asset brokers. Under IRS rules, sales or exchanges of assets, like digital assets, give rise to gain or loss in the same manner as sales of securities. Taxpayers who sell stocks or other securities through a broker receive an information return, IRS form 1099-B, that provides information on the gross proceeds and the basis of those sales. Those information returns are prepared by their brokers or custodians or other agents involved in the effecting of the sales. Today, there is lack of clarity on how these reporting rules apply to digital asset transactions. The underlying bill has two simple provisions to address that. The cryptocurrency provision in the bill makes it clear as to who counts as a broker within this market. Under the bill, a broker is defined as ``any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.'' For tax purposes, this means a sale on behalf of someone else.…
