Treasury Suggests Limiting Definition Of Digital Asset Broker

Recent correspondence between a group of U.S. Senators and the Department of the Treasury appears to have eased the significant concerns expressed by the digital asset sector regarding the scope of the new broker reporting legislation included in the recently passed Infrastructure Investment and Jobs Act (IIJA). The IIJA amended sections 6045 and 6045A of the Internal Revenue Code, which impose information reporting requirements on brokers and certain other persons that facilitate transactions involving "covered securities."

These amendments expand the definition of covered securities to include "digital assets" and the definition of broker to include "[a]ny person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person."¹ For these purposes, "digital assets" are defined as "[a]ny digital representation of value which is recorded on a cryptographically secured distributed ledger