What This Bill Does
This bill changes the federal tax definition of a "broker" to include people who buy and sell digital assets (like cryptocurrency) for customers. It also requires brokers to report digital asset transfers to the government and delays certain reporting deadlines to 2025. The bill also requires a study on how digital assets should be treated under cash-reporting laws.
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Who It Affects
People or businesses that buy and sell digital assets for customers; digital asset industry participants; the Treasury Department and its Financial Crimes Enforcement Network; Congress committees overseeing finance and banking.
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Key Provisions
* A broker now includes any person who stands ready to buy and sell digital assets for customers in their business (Sec. 2).
* A "digital asset" is defined as any digital representation of value recorded on a cryptographically secured distributed ledger (a type of digital record-keeping system) (Sec. 3).
* Brokers must report transfers of digital assets from accounts they control to accounts they don't control, but only customer information that customers voluntarily provide for legitimate business purposes (Sec. 3).
* The Treasury Secretary must conduct a study analyzing the effects of treating digital assets as cash under federal law, including impacts on privacy, compliance costs, innovation and U.S. competitiveness (Sec. 4).
* A report on the study findings must be provided to Congress within 365 days of the bill becoming law (Sec. 4).
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What Changes
The federal tax code now defines "broker" to specifically include digital asset sellers. Brokers must start reporting certain digital asset transfers starting after December 31, 2025. Previous reporting deadlines for digital assets move from 2023 to 2025.
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Important Definitions
**Digital asset:** Any digital representation of value recorded on a cryptographically secured distributed ledger.
**Broker (in this context):** Any person who, for payment, stands ready in their ordinary business to buy and sell digital assets when customers direct them to do so.
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Effective Date
Most provisions apply to returns filed and statements sent after December 31, 2025.
I
118TH CONGRESS
1ST SESSION H. R. 1414
To amend the Internal Revenue Code of 1986 to clarify the definition of
broker, and for other purposes.
IN THE HOUSE OF REPRESENTATIVES
MARCH 7, 2023
Mr. MCHENRY (for himself, Mr. TORRES of New York, Mr. DAVIDSON, Mr.
KHANNA, Mr. EMMER, Mr. SWALWELL, Mr. SCHWEIKERT, Mr. SOTO,
and Mr. HILL) introduced the following bill; which was referred to the
Committee on Ways and Means, and in addition to the Committee on Fi-
nancial Services, for a period to be subsequently determined by the
Speaker, in each case for consideration of such provisions as fall within
the jurisdiction of the committee concerned
A BILL
To amend the Internal Revenue Code of 1986 to clarify
the definition of broker, and for other purposes.
Be it enacted by the Senate and House of Representa-
1
tives of the United States of America in Congress assembled,
2
SECTION 1. SHORT TITLE.
3
This Act may be cited as the ‘‘Keep Innovation in
4
America Act’’.
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•HR 1414 IH
SEC. 2. CLARIFICATION OF DEFINITION OF BROKER.
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(a) IN GENERAL.—Section 6045(c)(1)(D) of the In-
2
ternal Revenue Code of 1986 is amended to read as fol-
3
lows:
4
‘‘(D) any person who (for consideration)
5
stands ready in the ordinary course of a trade
6
or business to effect sales of digital assets at
7
the direction of their customers.’’.
8
(b) EFFECTIVE DATE.—The amendment made by
9
this section shall apply to returns required to be filed and
10
statements required to be furnished after December 31,
11
2025.
12
SEC. 3. REPORTING OF DIGITAL ASSETS.
13
(a) BROKERS.—
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(1) DEFINITION OF DIGITAL ASSET.—Section
15
6045(g)(3)(D) of the Internal Revenue Code of 1986
16
is amended to read as follows:
17
‘‘(D) DIGITAL ASSET.—The term ‘digital
18
asset’ means any digital representation of value
19
which is recorded on a cryptographically se-
20
cured distributed ledger.’’.
21
(2)
APPLICABLE
DATE.—Section
22
6045(g)(3)(C)(iii) of such Code is amended to read
23
as follows:
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•HR 1414 IH
‘‘(iii) January 1, 2025, in the case of
1
any specified security which is a digital
2
asset, and’’.
3
(b)
FURNISHING
OF
INFORMATION.—Section
4
6045A(d) of such Code is amended to read as follows:
5
‘‘(d) RETURN REQUIREMENT FOR CERTAIN TRANS-
6
FERS OF DIGITAL ASSETS NOT OTHERWISE SUBJECT TO
7
REPORTING.—Any broker, with respect to any transfer
8
(which is not part of a sale or exchange executed by such
9
broker) during a calendar year of a covered security which
10
is a digital asset from an account wholly controlled and
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maintained by such broker to an account which is not
12
maintained by, or an address not associated with, a person
13
that such broker knows or has reason to know is also a
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broker, shall make a return for such calendar year, in such
15
form as determined by the Secretary, showing the infor-
16
mation otherwise required to be furnished with respect to
17
transfers subject to subsection (a). Information reported
18
by brokers under this section shall be limited to customer
19
information that is voluntarily provided by the customer
20
and held by the broker for a legitimate business purpose.’’.
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(c) DELAYED EFFECTIVE DATE FOR CERTAIN IN-
22
FORMATION REPORTING CHANGES; REVERSAL OF CER-
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TAIN ADDITIONS TO 6050I.—Section 80603 of the Infra-
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structure Investment and Jobs Act is amended—
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•HR 1414 IH
(1) by striking subsection (b)(3), and
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(2) in subsection (c), by striking ‘‘December 31,
2
2023’’ and inserting ‘‘December 31, 2025’’.
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(d) EFFECTIVE DATES.—
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(1) The amendments made by subsections (a)
5
and (b) shall apply to returns required to be filed
6
and statements required to be furnished after De-
7
cember 31, 2025.
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(2) The amendment made by subsection (c)
9
shall take effect as if included in the enactment of
10
section 80603 of the Infrastructure Investment and
11
Jobs Act.
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SEC. 4. STUDY AND REPORT ON TREATMENT OF DIGITAL
13
ASSETS AS CASH UNDER CERTAIN LAWS.
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(a) STUDY.—The Secretary, in consultation with the
15
Financial Crimes Enforcement Network, and representa-
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tives of the digital asset industry, organizations focused
17
on individual privacy and civil liberties, organizations en-
18
gaged in advocacy, research or developing standards relat-
19
ing to digital asset use, shall conduct a study on the effect
20
of expanding the definition of cash to include any digital
21
asset (as defined in section 6045(g)(3)(D) of the Internal
22
Revenue Code of 1986) solely for purposes of—
23
(1) section 6050I of such Code, and
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•HR 1414 IH
(2) section 5331 of title 31, United States
1
Code.
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(b) REPORT.—Not later than 365 days after the date
3
of the enactment of this Act, the Secretary shall provide
4
to relevant committees a report that contains all findings
5
and determinations made in carrying out the study under
6
subsection (a), including an analysis of—
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(1) the interpretation of, regulations under, and
8
enforcement of the sections specified in paragraphs
9
(1) and (2) of subsection (a),
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(2) the privacy and liberty rights and interests
11
of taxpayers and other persons affected,
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(3) the cost-benefit analysis of compliance,
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(4) the effect on the use of and access to digital
14
assets and the financial system,
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(5) the effect on innovation, and
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(6) the effect on the economic competitiveness
17
of the United States.
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(c) DEFINITIONS.—For purposes of this section—
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(1) RELEVANT COMMITTEES.—The term ‘‘rel-
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evant committees’’ means—
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(A) the Committee on Financial Services
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of the House of Representatives,
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(B) the Committee on Banking, Housing,
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and Urban Affairs of the Senate,
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•HR 1414 IH
(C) the Committee on Ways and Means of
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the House of Representatives, and
2
(D) the Committee on Finance of the Sen-
3
ate.
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(2) SECRETARY.—The term ‘‘Secretary’’ means
5
the Secretary of the Treasury (or the Secretary’s
6
delegate).
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SEC. 5. FINDINGS.
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Congress finds the following:
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(1) Advances in technology have led to the cre-
10
ation of digital assets and blockchain technology
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that will improve the United States financial system
12
and create a more fair and equitable structure for
13
everyday Americans.
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(2) The reporting requirements under current
15
law require digital asset market participants to ad-
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here to standards that are incompatible with this
17
technology’s operation. This will hinder the develop-
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ment of digital assets and its underlying technology
19
in the United States, shifting its development out-
20
side the United States.
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(3) The Chinese Government’s recent ban of
22
cryptocurrency transactions provides the United
23
States an opening to further enhance its role as the
24
leading nation in the development of innovative
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•HR 1414 IH
blockchain technologies. Providing clear rules for
1
both consumers and developers of digital assets is
2
essential to taking advantage of this opportunity.
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(4) Miners and validators, hardware and soft-
4
ware developers, and protocol developers are not ac-
5
tual brokers and do not collect or have reason to col-
6
lect the information required under the Infrastruc-
7
ture Investment and Jobs Act.
8
(5) It is not in the interest of American tax-
9
payers for Congress to create uncertainty.
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(6) Consistent and accurate reporting on digital
11
asset transactions is necessary. Congress must work
12
to bring legal and regulatory certainty to the digital
13
asset industry. Clear rules of the road fosters tech-
14
nology and innovation.
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(7) Any amendments made by this Act will not
16
impact revenue estimated from the Infrastructure
17
Investment and Jobs Act.
18
Æ
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