U.S. Senate rejects amendments to $1.2million infrastructure bill
On Monday, the U.S. Senate rejected a bipartisan amendment to the $1.2trillion infrastructure bill, aiming to clarify the tax-reporting provisions required for brokers in support of the Bitcoin industry.
The compromise which proposed amending provisions in the bipartisan infrastructure deal on crypto did not pass unanimous consent in the Senate. It is not expected the bill will go to a full vote without additional changes.
The news comes after days of debate in which senators Pat Toomey (R-PA) and Cynthia Lummis (R-WY) (publicly) sought to address problematic language included in the $1.2 trillion infrastructure bill. They fear that the bill’s provisions pose a threat to (financial) innovation.
The provision will not be amended, and this will mean that non-financial Bitcoin intermediaries such as miners, network validators, software developers and other service providers are included by definitions stated. This to the outrage of the Bitcoin community.
Although many of these parties, by definition, never take any control of a consumer’s assets, they could all be forced to provide full transaction information to the IRS. There is still hope though that he classification of any of these entities as brokers can be contested in U.S. courts.
What happened on Monday is that the senate rejected a proposed amendment that would have specified the definition of cryptocurrency brokers for tax-reporting requirements of transactions facilitated in excess of $10,000 to the IRS. The amendment was signed by Senators Toomey, Lummis, Warner (D-VA), Portman (R-OH), and Sinema (D-AZ). Its intention was clear, to clarify language that could potentially target anyone facilitating a transaction on behalf of someone else.
It was Senator Richard Shelby (R-Ala.) that objected to Senator Toomey’s request for unanimous consent on the amendment. In just two words, “I object”, the Alabama lawmaker seems to have single-handedly stopped the important amendment from being included to the bill prior to the final vote on Tuesday.
Senator Toomey said on Monday:
“All I want to do is have a vote on an amendment that fixes this in a way that has bipartisan agreement, in a way that constrains this to apply narrowly to the people who are actually the intermediaries, running a centralized exchange, who have this information.”
He also added:
“We’ll be back on this, because we’ll do a lot of damage. Who knows how much innovation we’re going to stifle. Who knows what kind of new apps never emerge. It’s hard to predict what kind of completely impossible mandate results in, but it’s not good, and it’s going to bring us back here trying to clean up a mess which we could have prevented.”
Senator Lummis commented once more on the important of innovation and the implications of an unamended bill will have, by saying:
“Developers are the lifeblood of innovation, and subjecting them to tax reporting would have far-reaching implications on privacy, and on the evolution of technology in this country—not to mention, most developers would not have access to useful data [for the IRS].”
She then issued a stern warning on Twitter about further implications the developments may have to the U.S. economy and as a nation:
This is why we started @FinancialCaucus – to educate those who are going to make decisions that affect this industry. If we keep pressing forward without understanding the implications of our actions, we are going to fall further and further behind China in financial innovation.
— Senator Cynthia Lummis (@SenLummis) August 10, 2021
Senator Ted Cruz highlighted that the bill would lead to a massive migration from crypto projects from the U.S. to other more friendly regions as he expressed criticism to his colleagues in the senate:
What the Senate said tonight: Let’s tax the hell out of something we know nothing about, so we can pass a giant bill we haven’t read, and spend the American people’s money on stuff we can’t afford. It’s reckless & harmful.”
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Author: Peter Siu