Treasury Signaled Miners and Coders Were Outside Crypto Broker Reporting

The U.S. Treasury Department signaled on February 11, 2022 that blockchain validators, private-key storage vendors and software coders generally were not intended to be treated as brokers under new digital-asset tax-reporting legislation when they lacked information useful to the Internal Revenue Service.

The position, delivered by Assistant Secretary for Legislative Affairs Jonathan Davidson in a letter to six senators, addressed one of the cryptocurrency industry’s most immediate federal-policy concerns. Section 80603 of the Infrastructure Investment and Jobs Act had added digital assets to broker-reporting rules and described a broker as a person who, for consideration, regularly provides a service effectuating digital-asset transfers on behalf of another person.

That statutory language remained controlling on February 11. Treasury’s letter described how the department and IRS intended to approach regulations; it did not amend the law, complete a rulemaking or create a blanket exemption for every business using the labels “miner,” “validator,” “wallet” or “developer.”

An information-based boundary

Treasury’s central distinction concerned access to reportable information. The letter said ancillary parties unable to obtain information useful to the IRS were not intended to fall within the broker-reporting requirements. Existing securities regulations, it explained, generally imposed broker reporting on market participants whose business gave them access to information about taxpayers’ sales.

The department applied that reasoning to several blockchain roles. People merely validating transactions through a consensus mechanism were unlikely to know whether a transfer represented a sale. Businesses only selling devices used to store private keys, and people merely writing software code, were not carrying out broker activities, according to the letter.

That mattered because blockchain validation ordinarily confirms protocol-level transfers without revealing whether the transaction was a taxable sale, a movement between wallets controlled by one person, a payment or another type of activity. The letter therefore indicated that technical participation in transferring a digital asset would not, by itself, supply the customer identity, proceeds and transaction context associated with conventional broker reporting.

The clarification responded to a December 14, 2021 request from Senators Mark Warner, Rob Portman, Mike Crapo, Kyrsten Sinema, Pat Toomey and Cynthia Lummis. Their official letter argued that Congress intended reporting to cover brokers enabling digital-asset transfers for consideration, not miners, stakers or self-custody technology providers acting only in ancillary roles.

Exchanges remained an open question

Treasury did not resolve the treatment of every digital-asset intermediary. Davidson wrote that the IRS and Treasury would consider how the rules should apply to centralized exchanges and businesses described as decentralized or peer-to-peer exchanges. The agencies intended to address the senators’ concerns in proposed regulations.

That reservation was significant. An exchange or application operator could have a customer relationship and transaction information that a base-layer validator lacked. Whether a particular service qualified as a broker would consequently depend on its functions and access to information, not solely on whether it marketed itself as centralized, decentralized or noncustodial.

The letter also did not erase the statute’s broader reporting project. The Infrastructure Investment and Jobs Act, signed on November 15, 2021, expressly added digital assets to specified-security provisions and defined a digital asset as a digital representation of value recorded on a cryptographically secured distributed ledger or similar technology, subject to Treasury’s authority.

What was—and was not—settled

For miners, validators, hardware vendors and code developers, the February 11 letter was meaningful evidence of Treasury’s intended direction. It reduced the immediate risk that roles lacking customer and sales information would automatically be expected to produce conventional broker reports.

The event-day conclusion must remain narrower than a formal exemption. Treasury had not issued proposed or final regulations on February 11, 2022, and the letter acknowledged unresolved questions about exchanges and other market participants. The durable development was an administrative interpretation tied to access to information—not a completed rule, judicial holding or repeal of Section 80603.