Crypto Tax Amendment Dispute Continues in US Congress
The Senate didn’t vote yesterday on two rival amendments that will determine which crypto entities must provide customer information to support paying Joe Biden’s $1 trillion infrastructure bill.
Senate was set to convene to vote on the amendments on Sunday, but so far this hasn’t happened. The outcome could send ripples throughout the US crypto industry, and executives fear that one of the outcomes could force decentralized finance entities out of US.
An amendment, proposed by three Senators Ron Wyden (D-OR), Cynthia Lummis (R-WY), and Pat Toomey (R-PA), would exempt non-custodial entities, like Bitcoin miners and wallet operators, from handing over customer information to the tax authorities. This is obviously the one that the crypto industry supports.
“We should not rope in people who are not actually running a centralized exchange,” Senator Toomey commented.
Spoke w/Wyden about ongoing crypto tax talks:
"I continue to feel very strongly I want to crack down on tax cheats and people associated with these centralized programs, crypto exchanges.. I just don't want to destroy the innovation that comes from a decentralized network"
The other amendment, which is proposed by Senators Mark Warner (D-VA) and Rob Portman (R-OH), and favored by President Biden, has been significantly revised after the crypto industry was heavily against it.
Originally, the bill exempted proof-of-work entities, like Bitcoin miners, but didn’t remove tax reporting obligations for proof-of-stake entities like Ethereum 2.0 validators. The crypto industry said this was unworkable because non-custodial entities don’t collect information about the people that use them.
Since then ,senators Warner and Portman have revised their amendment to exempt both proof-of-work and proof-of-stake entities, but not any other consensus mechanisms, like Ripple’s “Federated Byzantine Agreement” or Solana’s “Proof of History” mechanisms.
The crypto industry didn’t welcome the revision either, since it favors two consensus mechanisms over others for no clear reason.
Sen. Warner has changed his amendment to protect consensus mechanisms beyond PoW. A small positive step, but not nearly good enough.
It's just unreal that this is how Congress wants to handle major crypto legislation. We need time to make smart decisions. This process is broken. https://t.co/NftUjfnqHI
A Bloomberg reporter, Colin Wilhelm, tweeted that Toomey and Warner were locked in conversation “near the well of the Senate” but no formal discussions took place.
Sens. Toomey and Warner sitting and having an in-depth conversation near the well of the Senate. Both have put forward competing cryptocurrency amendments to the infrastructure package.
“I just don’t want to destroy the innovation that comes from a decentralized network.
The Senate is considering dozens of amendments, and the unwillingness of some Senators to expedite a vote on final passage of the bill may push it “until Monday night into Tuesday morning,” according to Manu Raju, CNN’s congressional correspondent. But the crypto provision, and other amendments, are expected to be dealt with before the final passage.
Right now, supporters of crypto & blockchain are LOSING this fight that will define crypto’s future.
If the Senators vote against both crypto amendments, other amendments could be tabled. Senator Ted Cruz, for instance, has filed his own amendment, if the Congress can’t reach a consensus.
Alternative amendments, such as Cruz’s, could be necessary if both amendments fail because striking crypto from the bill isn’t politically viable, said Jerry Brito, of DC-based crypto think tank Coin Center.
