Biden's Infrastructure Bill & Cryptocurrency: Senators Push for Reform

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A new bill has been filed to clearly define a crypto "broker" and tax-reporting reqs to ensure crypto innovation continues in the U.S.

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Key points

• President Biden's infrastructure legislation is now law, complete with anti-crypto provisions originally intended to offset some of the law's $1.2 trillion cost.
• A bipartisan pair of senators has proposed an amendment to that law to ease the burden on blockchain users and ensure crypto innovation.
• Time is on their side as the infrastructure law doesn't take effect until Jan. 2024.

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The same day that President Joe Biden signed the $1.2 trillion infrastructure bill into law this week, a pair of senators filed an amended bill to fix anti-cryptocurrency language within that law. Senators Ron Wyden (D-OR) and Cynthia Lummis (R-WY) submitted the bill to ease the legislative burden of the hastily-written, original language in the newly-signed law.

What's the anti-crypto language?

Basically, the bipartisan tandem opposes two key provisions in the original legislative language. The first bit of bureaucratic bloviation is a vague definition of a crypto "broker," which would mean unreasonable transaction reporting requirements for individual and small-time crypto users. The second piece of problematic pablum deals with requirements to provide significant data details to the IRS for initiators of crypto transactions of $10,000 or more.

Under the existing language, if you initiate a funds transfer for $10,000 in stablecoins to prepare for a house down payment, you would have to report reams of information you don't have about the crypto exchange that sent you your funds -- which makes no sense. And if you couldn't provide those details within 15 days, you would have committed a felony.

What does crypto have to do with infrastructure?

The original anti-crypto verbiage was added as a way to get crypto to offset some of the costs of the infrastructure bill. The thinking was that crypto mining rigs -- a.k.a. computers -- that rely on "proof of work" allegedly consume more than their share of electricity, so those crypto-energy gluttons should pay for that excess privilege. Even though the blockchain base was able to quickly mobilize and lobby against the language, with support from Senators Lummis and Wyden, those efforts failed.

How will the amended bill help everyday crypto users?

By narrowing the rules within the infrastructure law, Wyden and Lummis's bipartisan bill would help fix the loopy legislative overreach into crypto.

"Digital assets are here to stay in our financial system and the decisions we make now will have impacts far into the future," Senator Lummis stated in a joint press release with Senator Wyden. "We need to be fostering innovation, not stifling it, if we are going to maintain America's position as the global financial leader. I'm proud to introduce this bipartisan bill to ensure that our tax system reflects the realities of digital assets and distributed ledger technology."

Per government procedure, the amendatory bill still needs to be approved by two-thirds of both the Senate and House of Representatives. That should be much easier now that the actual spending program is law. If Congress approves it, replacement language won't go to the president but to the congressional Administrator of the General Services Administration, who transmits the change to the states.

While it's not a guarantee this amendment will pass, the senators have time on their side as the actual infrastructure law itself will not take effect until January 2024.

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