US Senators Introduce New Bill That Seeks To Amend Crypto Provision in Newly Signed Infrastructure Package

Two United States senators are introducing legislation to amend the crypto provision of the infrastructure bill that President Biden just signed into law.

Reaching across the aisle, Democrat Ron Wyden and Republican Cynthia Lummis seek to revise the new information-reporting rules imposed on the digital asset space.

The proposed amendment intends “to revise the rules of construction applicable to information reporting requirements imposed on brokers with respect to digital assets, and for other purposes.”

As a press release from Sen. Lummis explains,

“Under current law, those who are involved in digital asset mining or staking, providing digital asset hardware or software wallets, or developing digital asset protocols may fall under the definition of ‘broker’ for tax purposes and would be subject to certain Internal Revenue Service (IRS) reporting requirements.

The senators’ bill would clarify that the ‘broker’ definition excludes miners and stakers, as well as wallet providers and developers, and would ensure that only those digital asset intermediaries that actually have access to material customer information are required to report to the IRS.”

Senator Wyden says it is “critically important to protect innovation in the digital asset space.”

“Our bill makes clear that the new reporting requirements do not apply to individuals developing blockchain technology and wallets. This will protect American innovation while at the same time ensuring those who buy and sell cryptocurrency pay the taxes they already owe.”

Lummis, who has been a vocal advocate of cryptos as well as a buyer of Bitcoin (BTC), says digital assets are now a part of the financial system and today’s decisions will have long-term effects.

“We need to be fostering innovation, not stifling it, if we are going to maintain America’s position as the global financial leader. I’m proud to introduce this bipartisan bill to ensure that our tax system reflects the realities of digital assets and distributed ledger technology.”

President Biden signed the Infrastructure Investment and Jobs Act/Bipartisan Infrastructure Framework (HR 3684) bill into law on Tuesday.

Currently, Section 80603 of the law says,

“Return Requirement for Certain Transfers of Digital Assets Not Otherwise Subject to Reporting.

Any broker, with respect to any transfer (which is not part of a sale or exchange executed by such broker) during a calendar year of covered security which is a digital asset from an account maintained by such broker to an account which is not maintained by, or an address not associated with, a person that such broker knows or has reason to know is also a broker, shall make a return for such calendar year, in such form as determined by the Secretary, showing the information otherwise required to be furnished with respect to transfers subject to subsection (a).’”

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Finland Seeking Brokers for Selling $79M Bitcoin Seized from Illegal Drug Market

The Custom authority of Finland has announced that it is looking to hire brokers to sell 1,981 Bitcoins seized from illegal drug dealer networks to convert them into fiat currency. At the time of writing, the bitcoins in question are worth about $79 million and currently are held by Finnish Customs.

Pekka Pylkkanen, the director of finances at the Finnish Customs government agency, talked about the development and said that Finland’s customs authority is looking to sell the Bitcoins via a broker, stating that a broker will ensure a reliable and safe selling of the crypto assets.  

According to the report, Finland’s customs authority plans to sign up to three brokers for a two-year deal valued at about €250,000 ($297,000). It could reach as much as €2 million if the government agency seizes more Bitcoins and other cryptocurrencies. That range takes into account the volatile price movement of cryptocurrencies.

The customs agency confiscated the majority of the seized Bitcoins (1,666 out of 1,981) in 2016 after arresting Finnish drug dealer Douppikauppa.

During that time, the government told authorities that they were prohibited from storing the coins on crypto exchanges and was advised to keep them off digital platforms.

At the time of confiscation, the bitcoins were worth about $860,000, but currently, they are valued at more than $79 million.

In 2018, the customs authority was looking to sell Bitcoins through auction, but the agency did not proceed with the plans because there were concerns that the crypto assets would end back in criminal hands.

Now the price of Bitcoin has skyrocketed, Finland’s customs authority wants to liquidate the seized coins as soon as possible in the coming months.

Direct Seizures and Sales of Cryptos

In recent years, multiple nations have sold crypto-assets seized during criminal investigations, with the US taking the lead in 2020.

In November 2020, the US Department of Justice seized more than $1 billion worth of Bitcoin linked to the Silk Road website’s criminal marketplace.

During that time, the Justice Department moved about 70,000 Bitcoins from an account believed to be linked to the illicit marketplace. Silk Road was an online black market for selling everything from drugs to murderers-for-hire and stolen credit cards.   

The US government shut down the online black market in 2013. But the sum mentioned above was the largest amount of cryptocurrency seized to date by the Department of Justice.

In March 2021, the French government also auctioned off €28 million worth of Bitcoins seized from hackers in 2019.

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Australian Online Broker SelfWealth Becomes the First Platform to Add Crypto for Trading

Australian online broker SelfWealth plans to list ten cryptocurrencies, including Bitcoin (BTC) and Ethereum (ETH), on its trading platform to provide customers with diversified investment categories before the end of this year.

SelfWealth currently is one of Australia’s largest non-bank online brokers, listed on the Australian Securities Exchange (ASX).

Its platform owns 95,000 investors, with assets under management exceeding 5.9 billion Australian dollars (US$4.4 billion).

According to a report from the Australian Financial Review on Sunday, SelfWealth plans to store cryptocurrencies in an integrated third-party wallet and provide customers with real-time cryptocurrency transactions. It will charge for each cryptocurrency transaction with a certain fixed percentage of the handling fee, similar to traditional stock transactions.

SelfWealth recently surveyed 3,500 of its 95,000 members, suggesting 30% invest in crypto, and 38% intend to invest in digital assets.

The CEO of SelfWealth, Cath Whitaker, revealed that:

“Australians have decided that cryptocurrency is here to stay and are looking for trusted platforms to facilitate their investment decisions. We are on track to deliver cryptocurrency exchange functionality by year-end.”

The trading platform firstly launched US stocks in December 2020. Whitaker believes that this plan to add cryptocurrency investment to the platform will be an “Australian first”-investors can buy and sell crypto assets in real-time while trading local stocks and U.S. stocks on the same platform.

“Moving between popular investment types usually requires access to multiple trading platforms and for investors to move money multiple times,” Whitaker said.

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Robinhood’s cash cow under SEC scrutiny amid IPO filing

Trading platform Robinhood could lose a significant revenue source should the United States Securities and Exchange Commission (SEC) move to ban the controversial payment for order flows (PFOF) — routing retail trading orders to market makers.

Brokers like Robinhood often use the practice to offset trading fees thus providing zero commission trading to its retail customer base.

According to the Wall Street Journal on Wednesday, Robinhood’s initial public offering (IPO) filing revealed that the broker earned 81% of its Q1 revenue from payment for order flows covering stock, options and crypto. As previously reported by Cointelegraph, Robinhood filed for its IPO on Thursday, July 1.

SEC Commissioner Gary Gensler has previously criticized the practice and the Gamestop saga from earlier in the year has also put the matter in the spotlight. Indeed, the company paid a $65 million fine imposed by the SEC back in December amid allegations that Robinhood misled retail customers about the use of PFOF.

Meanwhile, Robinhood has stated that any SEC action against PFOF, including stringent regulations or an outright ban, could negatively impact its business. Payment for order flow is a banned practice in jurisdictions like Canada and the United Kingdom.

The uncertainty over the SEC’s stance on PFOF under Gary Gensler is the latest hurdle for Robinhood in its IPO journey. Back in June, the Commission’s inquiry into the company’s crypto trading business reportedly delayed its IPO filing.

Related: Facing $70M in fines from regulators, Robinhood files for IPO

Indeed, Robinhood’s crypto division has experienced significant growth in 2021 with its Q1 performance constituting a sixfold increase over the previous quarter. Back in April, the company announced a new chief operating officer to oversee its expanding cryptocurrency trading operations.

As previously reported by Cointelegraph, the U.S. Financial Industry Regulatory Authority fined Robinhood $70 million back in June. The FINRA fine was reportedly due to “widespread and significant harm” attributed to the company against thousands of its users.