Who counts as a crypto broker mattered less than what brokers could not know
The Senate’s August 2021 fight over the infrastructure bill’s crypto provision was about who counts as a broker. For banks and brokerages, scope was never in doubt. The hard part was three kinds of data they did not hold: cost, movement and counterparties.
Looking Back revisits one week at a time, from January 2020 to today, and asks what it meant for the banks, health systems and public agencies we serve. The series was written in 2026, with the benefit of hindsight, and each article says which week it looks back on.
The week
On August 10, 2021, the Senate passed the Infrastructure Investment and Jobs Act by 69 votes to 30. To help offset its cost, the bill expanded tax information reporting for digital assets. It widened the definition of a broker to include any person who, for consideration, is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person. It treated digital assets as specified securities for cost basis reporting, extended broker-to-broker transfer statements to them, and brought digital assets within the rule that requires businesses to report cash receipts over $10,000. Industry groups and several senators argued that the broker definition could reach miners, validators and software developers. Competing amendments to narrow it circulated that week, and a compromise failed to get unanimous consent for a vote. The House passed the bill in November, and it was signed into law on November 15, 2021.
Most of the August debate was about the edges of the definition: whether a miner, a validator or a wallet developer could be a broker. That mattered to the crypto industry. It barely touched banks, broker-dealers and wealth managers considering digital asset services. A firm that buys and sells digital assets for customers and holds them in custody was a broker under every version of the text. For those firms, the provision did something familiar. It applied the securities information reporting regime, gross proceeds, cost basis and transfer statements, to a new asset class.
Familiar did not mean easy. Securities reporting works because the data it needs exists inside the brokerage system and travels between brokers in standard formats. Digital assets were designed to move without intermediaries, so much of that data sits nowhere a broker can reach. The provision therefore exposed three data gaps, each harder than the scope question: cost, what the customer paid; movement, where the asset has been; and counterparties, who was on the other side of a payment.
Cost: basis the broker never saw
For securities, brokers report cost basis for covered securities, those bought in the account after the basis rules took effect, and track adjustments such as splits. A broker knows the basis because it executed the purchase.
Digital asset customers commonly buy on one platform, move assets to a self-hosted wallet, and later deposit them with another provider to sell. The selling broker sees the sale. It has no reliable record of the purchase. The customer may have bought years earlier, on an exchange that no longer exists, in many small lots. Some assets arrived through staking rewards, airdrops or forks whose tax treatment was itself unsettled in 2021.
The practical consequence was a two-tier book. Assets bought and sold inside the firm could carry clean basis. Assets transferred in would carry none, or a customer-supplied figure the firm could not verify. Firms needed to tag every lot by origin from day one, decide how to treat customer-supplied basis, and design statements that made the gaps clear. A firm that mixed the two tiers would issue forms that were wrong in ways customers would find at tax time.
Movement: transfers without a common language
The second gap is movement. In securities, when a customer moves shares between brokers, the transferring broker sends a statement with basis and acquisition dates. The law extended that duty to digital assets moving between brokers. It could not extend it to self-hosted wallets, where no broker exists to send anything, and in 2021 the brokers themselves had no shared format or network for exchanging such statements.
That made transfer data an industry plumbing problem layered on a firm problem. Inside the firm, every deposit and withdrawal needed to be classified: is this an incoming transfer from another broker, from the customer’s own wallet, or a payment from someone else? Each answer implies different reporting. The blockchain shows that an asset moved. It does not show whose wallet it came from or why. Firms with mature securities operations already had transfer processing teams. They needed those teams to learn a new asset class with none of the standard messaging they relied on.
There is a control benefit here too. The same classification that drives tax reporting feeds anti-money laundering monitoring and sanctions screening of wallet addresses. A firm that builds one transfer classification service, used by tax, compliance and customer service, avoids three teams reaching three different answers about the same deposit.
Counterparties: the $10,000 rule and the unknown sender
The third gap came from the cash reporting rule in section 6050I of the tax code. It requires any trade or business that receives more than $10,000 in cash in one transaction, or related transactions, to file a report with the payer’s name, address and taxpayer identification number. Treating digital assets as cash for this purpose meant that a business accepting a large crypto payment would need to identify the sender.
This duty fell on recipients, not brokers, which is what made it so broad. A car dealer, a law firm or a commercial bank customer accepting crypto would carry it. In a peer-to-peer payment, the recipient may know only a wallet address. Critics called it unworkable and a privacy problem. For banks, the relevance was indirect but real: business clients accepting digital assets would ask how to comply, and some would expect their bank or payment processor to collect sender information on their behalf. Organizations should check with counsel on how these obligations apply to them.
The three gaps share a cause. Information reporting assumes that intermediaries see both ends of a transaction and talk to each other. Digital assets often have neither property. Firms that started in 2021 by mapping, for each customer asset, what they knew about its cost, path and counterparties found the eventual forms manageable. Firms that waited for the forms found that the hard work was the data model, not the form.
With hindsight
From 2026, implementation has been slow and partial. Treasury and the IRS finalized rules for custodial digital asset brokers in mid-2024 and introduced Form 1099-DA. Gross proceeds reporting began with 2025 transactions, and basis reporting applies to assets acquired in the customer’s account from 2026, so basis for assets transferred in from elsewhere remains the customer’s problem. The final rules did not yet implement broker-to-broker transfer statements for digital assets. A separate rule extending broker reporting to certain decentralized finance participants, finalized in December 2024, was overturned by Congress under the Congressional Review Act in April 2025. For the $10,000 rule, the IRS said in January 2024 that businesses need not report digital asset receipts until regulations are issued. All three gaps identified above are still visible in what the rules require, and firms should confirm current obligations with counsel.