Senate Tries to Clean Up Crypto Mess: Coders Won’t Be Considered Financial Brokers in Toomey-Lummis ‘Infrastructure’ Compromise

Sen. Pat Toomey, R-Pa., arrives for votes on amendments to advance the $1 trillion bipartisan infrastructure bill, at the Capitol in Washington, Wednesday, Aug. 4, 2021. (AP Photo/J. Scott Applewhite)
AP Photo/J. Scott Applewhite

Sens. Pat Toomey (R-PA) and Cynthia Lummis (R-WY) announced Monday that the Senate struck a compromise on the cryptocurrency provision in the so-called bipartisan infrastructure bill.

Toomey said Senate Democrats, Senate Republicans, and members of the Treasury Department struck an accord on how to fix the $30 billion tax on cryptocurrency in the legislation.

“Our solution makes clear that a broker means only those who conduct transactions on exchanges where consumers buy, sell, and trade,” Toomey, the ranking member of the Senate Banking Committee, said.

Sens. Toomey, Lummis, Mark Warner (D-VA), Kyrsten Sinema (D-AZ), and Rob Portman (R-OH) issued a joint statement, saying:

There’s broad agreement that digital asset exchanges behaving as brokers should be required to report transactions just like other kinds of brokers already do. There is also concern that tax evasion and non-compliance are becoming significant issues surrounding cryptocurrencies and digital assets. Some have expressed confusion concerning the underlying text of the infrastructure bill, suggesting it would result in the application of reporting requirements far too broadly and ensnare individuals, developers, and other elements of this ecosystem that could not comply with a reporting mandate.

We’ve worked with the Treasury Department to clarify the underlying text and ensure that those who are not acting as brokers will not be subject to the bill’s reporting requirements. While we each would have drafted this solution differently, we all agree it’s important to ensure that these obligations are properly crafted to apply only to entities that are regularly effectuating transactions of digital assets in exchange for consideration.  To best memorialize this common understanding, we propose to incorporate this important amendment into the infrastructure bill and urge our colleagues to join us in enacting this bipartisan clarification.

Sen. Ron Wyden (D-OR), who worked with Toomey and Lummis on the amendment to fix the original cryptocurrency provision, was not part of the compromise.

Toomey, Lummis, and other lawmakers and industry officials warned the original provision in the infrastructure bill could send American jobs overseas.

Although Toomey said it is not the preferred solution, “it is much better than the underlying text.”

The Pennsylvania republican said the cryptocurrency industry continues to innovate so fast that Congress may have to adjust its rules within the next year.

“We may very well have to go back and revisit the rules, but we shouldn’t just have an overly broad mandate or reporting requirement on people who can’t possibly comply,” he said.

He said that there is a “universal agreement” that bitcoin exchanges should have to report transactions, although Toomey said the original provision is “significantly flawed.” He emphasized that non-bitcoin exchanges such as node operators, software coders, and others should not have to be subject to the reporting rules.

Lummis said that the Biden Treasury Department “got a jump” on Congress in trying to push their more onerous regulations on the cryptocurrency industry.

The Wyoming conservative thanked the cryptocurrency industry for being so helpful in lobbying Congress to adopt a more friendly regulation of the industry.

“The future is in digital assets,” Lummis said.

Sean Moran is a congressional reporter for Breitbart News. Follow him on Twitter @SeanMoran3.

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