Sens. Cynthia Lummis (R-WY) and Ron Wyden (D-OR) proposed an amendment to address concerns over the so-called bipartisan infrastructure bill’s provision to tax and regulate the cryptocurrency industry.
Sen. Rob Portman (R-OH) proposed a “pay for” to the $1.2 trillion as an attempt to pay for the mammoth, 2,702-page legislation. The provision contains an overly broad definition of a “broker” that would subject much of the cryptocurrency industry to financial reporting requirements. Despite the negative implications for the industry, it would only bring in roughly $30 billion.
To address the concerning provision, Sens. Wyden, the chairman of the Senate Finance Committee, and Lummis, a member of the Senate Banking Committee, introduced amendment 2137 to the infrastructure bill.
The provision would clarify that digital asset miners, who maintain the digital asset networks, and the creators of software and hardware used to self-custody digital assets, are not subject to IRS reporting requirements. The bipartisan amendment also clarifies that digital assets are integrated into the financial sector without harming innovation. Lummis and Wyden’s proposal would focus on making sure that those who profit from trading digital currency assets can pay taxes on their earnings.
Lummis said in a statement Wednesday that this amendment would not stifle innovation:
Digital assets are here to stay. While much more work needs to be done, this amendment is a responsible step toward fully incorporating digital assets into the U.S. financial sector. The digital asset and financial technology space is incredibly complicated, and we have spent long hours working in the Senate, with industry stakeholders, and with the Administration to find a way to effectively integrate digital assets into our tax code without harming the technology or stifling innovation. I look forward to continuing this bipartisan work to bring our financial industry into the 21st Century.
Sen. Pat Toomey (R-PA), the ranking member of the Senate Banking Committee, backed the amendment.
“While Congress works to better understand and legislate on issues surrounding the development and transaction of cryptocurrencies, it should be wary of imposing burdensome regulations that may stifle innovation,” he said Wednesday.
Toomey added, “By clarifying the definition of broker, our amendment will ensure non-financial intermediaries like miners, network validators, and other service providers are not subject to the reporting requirements specified in the bipartisan infrastructure package.”
By clarifying the definition of broker, our amendment will ensure non-financial intermediaries like miners, network validators, and other service providers are not subject to the reporting requirements specified in the bipartisan infrastructure package. https://t.co/Fz09L3AyLL
— Senator Pat Toomey (@SenToomey) August 4, 2021
The amendment specifically notes that a broker would not include:
- “validating distributed ledger transactions”
- “selling hardware of software for which the sole function is to permit a person to control private keys” for the digital asset
- developing digital assets or their corresponding protocols for use by other persons
The amendment would also establish that it is the “sense of Congress that nothing in the amendments made by section 80603 of the infrastructure bill” would have any effect on the Securities Act of 1933 or the Securities Exchange Act of 1934.
The Blockchain Association, Coinbase, Coin Center, Ribbit Capital, and Square announced their support for Wyden and Lummis’ amendment.
The original amendment by Portman drew swift backlash from pro-crypto lawmakers such as Reps. Ted Budd (R-NC) and Tom Emmer (R-MN).
Budd said that the original provision would be “devastating” for American jobs.
Sean Moran is a congressional reporter for Breitbart News. Follow him on Twitter @SeanMoran3.