U.S. Internal Revenue Service Will Not Collect Data from Users of Non-Custodial Services
Several categories of crypto services and software developers were officially exempted from submitting data to the IRS.
The Treasury has officially eliminated the need for miners, software and staking pools developers to hand over to the Internal Revenue Service (IRS) data on cryptocurrency transactions of their clients. This was revealed in an official response to a December 2021 request from a group of senators to the agency.
In the response, Treasury Assistant Secretary for Legislative Affairs Jonathan Davidson explained that “ancillary parties who cannot get access to information that is useful to the IRS are not intended to be captured by the reporting requirements for brokers.” Thus, blockchain node operators, DeFi protocol liquidity providers, and other non-custodial services are also not subject to this requirement.
Davidson also noted that the Treasury intends to define “broker” more precisely in relation to cryptocurrency companies.
Recall that in December 2021, a group of U.S. senators sent a letter to the head of the Treasury Department with a formal request for clarification of the policy on data collection from cryptocurrency “brokers.” One of the request’s authors, Senator Rob Portman, posted the answer on his Twitter account.
The need to clarify these points arose after U.S. President Joe Biden signed a nearly $1.2 trillion infrastructure funding bill in November 2021. Among other things, the law required crypto brokers and operators to report to the IRS any transactions in digital assets worth more than $10.000.