Aug 9, 2021 - Economy & Business

How crypto jammed the Senate

Illustration of a pixelated coin hovering above a pedestal.
Illustration: Shoshana Gordon/Axios

In a sign of the times, cryptocurrency regulations held up a massive infrastructure bill in the U.S. Senate.

Catch up quick: A crypto tax reporting amendment to the $1 trillion package sought to bring in some $28 billion in new tax revenue.

  • A vote was held today at around 4:30 p.m. ET, potentially determining how the crypto industry evolves in the U.S. —  in a bill completely unrelated to crypto. The amendment needed unanimous consent to make the cut, but an objection from Sen. Richard Shelby (R-Ala.) prevented it from being adopted.

The big picture: As CoinDesk’s Nikhilesh De reports, the crypto industry fears the passage of the bill might lead to businesses and developers leaving the U.S.

  • At issue is a provision that would broadly define the term "broker," leading to fears that non-broker entities would be forced to shut down for non-compliance.
  • Brokers specifically need identifying information from customers when facilitating crypto transactions, which miners, validators, developers and hardware manufacturers – the firms and individuals undergirding the crypto economy – may not have.
  • These companies may choose to leave the U.S., lock out U.S. customers or just shut down their operations if forced to comply with these regulations, putting a dent in a rapidly-growing industry within the U.S.

The latest:  Despite much angst on crypto Twitter, the Senate rejected a compromise on Monday to narrow the scope of the rule to only those entities that actually facilitate transactions for customers.

  • The industry's eyes now turn to the House of Representatives, which could modify the language before passing the bill.
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