Crypto Industry Seeks to Curb Tax Provision in House After Senate Setback – The Wall Street Journal

WASHINGTON—The cryptocurrency industry sought unsuccessfully to limit a provision in the bipartisan infrastructure bill seeking to toughen tax enforcement of crypto transactions. It is now hoping for another shot when the bill moves to the House.

The provision in the roughly $1 trillion plan, approved by the Senate Tuesday, requires brokers of digital assets to report on gains from trading to the Internal Revenue Service. As crafted, it would raise an estimated $28 billion over a decade to help pay for improved roads, bridges, ports and other infrastructure.

Proponents of the Senate’s provision say it would help crack down on tax evasion while also making it easier for crypto investors to meet their tax obligations. Sen. Rob Portman (R., Ohio) was the lead writer of the provision, in consultation with the Biden administration.

But the cryptocurrency industry says the provision was written too broadly and might extend to entities that aren’t brokers and don’t hold customer information. That could inadvertently damp innovation, the industry says.

“Washington politics prevailed over common sense,” said Kristin Smith, executive director of the Blockchain Association, an industry lobbying group, adding this week’s “setback isn’t the end.”