A group of bipartisan lawmakers introduced the Keep Innovation In America Act on Thursday. The bill aims to amend the definition of “crypto broker” in the Infrastructure Investment and Jobs Act, signed into law earlier this year. The new bill also seeks to amend the tax code as well as transactions between brokers and non-brokers.
Ranking member of the House Financial Services Committee, Patrick McHenry (R-NC), said, “On the one hand, we have the Infrastructure Investment and Jobs Act that President Biden signed into law on Monday. It includes digital asset reporting requirements that threaten to push innovators and entrepreneurs overseas. This would leave the U.S. as a passive observer of a rapidly evolving industry. On the other hand, we can fix these poorly constructed standards and ensure they are compatible with how this new technology actually works.”
The infrastructure bill contains a provision that looks to expand the definition of a broker for crypto tax reporting purposes. The new definition could net nearly $30 billion in revenue over the next decade but could also cripple wallet manufacturers or software developers who would not have the capacity to comply with the tax reporting requirements. The other provision that had cryptocurrency investors concerned was a new requirement to maintain receipts and “know-your-customer” information from senders, which could be considered anathema to the privacy-focused cryptocurrency space.
The Keep Innovation in America Act would change both of these, which is good news for funds dealing with digital infrastructure, such as the VanEck Digital Transformation ETF (DAPP). The reporting and tax requirements could have complicated things for a number of DAPP’s holdings, including wallet providers, software, and hardware companies that make up the digital infrastructure of the cryptocurrency space.
One of the sponsors of the new bill, Tim Ryan (D-OH), said in a statement, “We have to figure out how to balance consumer protection and reasonable oversight while simultaneously providing these technologies and companies with the necessary space they need to grow, innovate and democratize the financial sector.”
The bill has broad support from the cryptocurrency industry. After it was introduced on Thursday, Coin Center, the Blockchain Association, the Crypto Council for Innovation, the Electronic Frontier Foundation, and more released statements supporting the bill.
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