- The emergence of an 11th-hour amendment to provisions for cryptocurrency taxation has thrown the infrastructure bill for a loop, with voting held off until Saturday.
- The second amendment has provoked hostile reactions from the crypto community, which was flush off of the success of its earlier push to change the legislation’s original language.
- The Block digs into the controversy surrounding the original legislation as well as the conflict between the two attempts to change it.
The crypto tax provisions in the infrastructure bill before the Senate have become the subject of a legislative brawl, as a competing amendment emerged Thursday night.
The new amendment
Last night, Republican Senator Rob Portman, along with Democrats Kyrsten Sinema and Mark Warner, introduced an amendment to the trillion-dollar infrastructure bill’s provisions for crypto tax reporting. The new amendment competes with one put forward on Wednesday by Senators Ron Wyden, Pat Toomey and Cynthia Lummis.
This is despite the fact that Portman, who was behind the original language of the bill, appeared to voice support for the Wyden-Toomey-Lummis amendment earlier yesterday, tweeting that “the Senate should vote on their amendment.”
The $1.2 trillion bill, as agreed on by the small bipartisan group of Senators who drafted it, seeks to tighten standards for crypto companies reporting to the IRS as part of the bill’s funding mechanisms.
Estimates of the returns on the original crypto provisions are $28 billion, though
The core dispute
The principal difference between the two is the scope of definitions.
Brokers in the U.S. are subject to stringent requirements to report certain transactions to the IRS, including identifying information on the parties involved. It’s something the industry has been anticipating for crypto exchanges for years.
However, many crypto service providers and network participants are not participating in broker-like transactions — with miners, stakers, node operators and software developers emerging as particular areas of concern in reactions to the original bill.
Crypto interest groups and the broader community reacted with rare unity and speed. They highlighted that the sort of reporting required would not even be technologically possible for many of these network players.
In a statement to The Block, Congressman Warren Davidson summarized: “It’s a shame the Senate took this approach: potentially causing massive collateral damage for crypto in days when we’ve sought real legislative clarity from the committee process for years. “
The emergence of the Wyden-Toomey-Lummis amendment was, therefore, seen as a major victory for the crypto industry.
But now? The new amendment features just two carve-outs: proof-of-work miners, and private key software service providers.
Some are calling the new amendment worse than nothing. In a Twitter thread on the new measures, Coin Center executive director Jerry Brito said: “The Warner amendment is NOT a compromise. It would make the tax provision WORSE than if we had no amendments at all.”
Law professor Angela Walch, who was notably unfavorable to the industry at a Senate hearing on July 27, was even more opposed to the infrastructure bill’s provisions.
How did the new amendment come about?
The Portman-Sinema-Warner amendment’s emergence at the 11th hour is a major sticking point, extending negotiations on the broader infrastructure bill into the weekend though many thought it would pass in the Senate last night.
As Coin Center’s Neeraj Agrawal told The Block: “This is no way to make policy.”
Despite that tardiness and the industry’s concerns, last night’s amendment seems to have gained traction, or at least high-level support.
The White House has already come out in support of the latest amendment. Jeff Stein of the Washington Post wrote that Treasury Secretary Janet Yellen has personally lobbied against the earlier amendment, even going so far as to contact Wyden directly.
But meanwhile, negotiations for the infrastructure bill will roll into the weekend, with the crypto tax debate a centerpiece of the dispute.