Despite strong lobbying attempts from the crypto industry for last-minute amendments, the Biden administration’s US$1 trillion infrastructure bill passed the Senate last night with heightened tax reporting requirements for crypto “brokers” and possible ramifications for crypto miners, as Yahoo News reports.
Fast facts
- A compromise amendment requiring unanimous consent to be added to the bill was proposed by a bipartisan group of Senators in the last minute to create a carve-out for crypto miners. Sen. Richard Shelby objected, however, after his proposal to increase military spending in the bill was blocked. The bill now awaits a final vote in the House of Representatives before becoming law.
- The bill, which passed the Senate with a 69-30 vote, sought to raise an estimated US$28 billion over the next decade through increased reporting requirements for crypto “brokers”. The crypto industry had pushed back on this provision, however, arguing the definition of broker was too broad, as it included “any person who (for consideration) is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”
- Under this definition, miners and network validators would be required to provide customer’s details on an Internal Revenue Service Form 1099 — a condition deemed unworkable for miners. “As those who understand crypto already know, users are pseudonymous & access is permissionless. It’s literally impossible for non-custodial actors like miners to get the information they need to do Form 1099s. In practice, this could mean a de facto ban on mining in the USA,” said Compound Labs General Counsel Jake Chervinsky on Twitter.
- Over the course of the weekend, two competing amendments to limit this definition to differing degrees were considered — including one that had White House support — but neither were taken up before the Senate agreed to hold the vote on Tuesday.
- Despite the bill’s potential impact on the cryptocurrency industry, its passage by the Senate appeared to have minimal impact on the market. Bitcoin’s price dropped nearly 3% overnight, though it had mostly recovered by this morning, Asia time. Bitcoin was trading at US$45,789 at publishing time.