It is a bizarre sight. Sen Lummis (R-WY) one of the most conservative senators, Sen Toomey (R-PA) one of the GOP members who voted for Trump’s second impeachment, and Sen Wyden (D-OR) a strong liberal voice, all joined together in trying to amend the Infrastructure Bill. This move stalled the Bill that the entire country has been looking at for months, although the Senate finally voted to end debate on the night of August 8 and are expected to vote on the bill by August 10. But what exactly caused this stall, how did cryptocurrency create such a whirlwind of reaction and contention?
It all started with compromise. In trying to get the infrastructure bill passed with bipartisan support, which would be a major win for the Biden White House, the Democrats relented on how to fund the bill. Republicans, were concerned about raising taxes, but agreed with the Democrats’ idea to close tax loopholes. One of the loopholes was the reporting of cryptocurrency income. Sen Portman (R-OH) drafted part of the legislature that would require crypto brokers to report transactions over $10K USD. This would help track tax dodgers and get them to pay up, with estimates suggesting up to $28mil could be gain over 10 years. However, confusion over terms and the way the text was written meant miners and other crypto software devs would also be forced to report. This would be essentially impossible for them, and could potentially kill the Bitcoin mining business in the US.
As news of the language spread, the internet reacted quite loudly. Pushes on Reddit and Twitter called for people to contact their Senators to express their dissatisfaction. The White House said they would note use the legislature to target miners, but they stressed that adding too many exceptions could just create more loopholes in the future. That was not enough though for Bitcoin supporters (rightfully so), the miners’ ability to operate had to be codified as an amendment.
Sens Wyden and Toomey, supported by Lummis, quickly drafted up an amendment that would address this. Specifically, it said that miners and software developers would be exempt. This was a major coup for Crypto lobbyists, getting a diverse bipartisan group to draft such an amendment.
“(A) validating distributed ledger transactions (B) selling hardware or software for which the sole function is to permit a person to control private keys which are used for accessing digital assets on a distributed ledger, or © developing digital assets or their corresponding protocols by other persons, provided that such other persons are not customers of the personal developing such assets or protocols.”
Their amendment gained the support of the crypto community, and thousands called into their Senators calling for their support.
However, the White House and other Senators felt this went too far, would create too many loopholes in the future. Sen Warner (D-VA), Sen Portman, and Sen Sinema (D-AZ) drafted their own amendment as a compromise between the two positions. This would exempt crypto miners who use PoW (Proof of Work) in mining. This type of mining is what makes Bitcoin so energy intensive, and is used by Bitcoin, Ethereum, and BCH, and a few others. However, the amendment specifically does not exempt PoS (Proof of Stake) which allow miners to use less energy. Many altcoins use PoS. This amendment would give a serious advantage to the more “traditional” crypto, like Bitcoin. It could also see Doge reverse its movement to PoS mining.
And it is the amendment most likely to pass. The White House quickly threw its support behind the amendment, with Secretary of Treasury Janet Yellen personally talking to Sen Wyden to get him to support the new amendment. Wyden hasn’t backed down however, and Sen Toomey tweeted about the new amendment:
But with the cloture vote on Sunday night, the time for debate has ended, and it is likely that the Warner-Portman-Sinema amendment will be the one voted on, as it has the support of the White House. This would have huge consequences for the crypto world, and will likely cement Bitcoin’s position and power.
Although the debate is over on the infrastructure bill, Bitcoin is not gone from the halls of Congress. This debate has shown that Congress will have to start paying more attention to Bitcoin and cryptocurrencies in the future. There will be more discussions about regulation, and strange coalitions will form, even stranger than Lummis joining Wyden and Toomey. Keep your eyes open, and stay involved if you want to shape the debate.