Two amendments to a cryptocurrency provision hidden in a $1 trillion infrastructure package are now being considered by the Senate.
In the $1 trillion infrastructure package now being reviewed by the Senate, two changes have been proposed to a controversial cryptocurrency clause that had been previously hidden away.
Under this provision, protocol developers and proof-of-stake validators will be subject to additional tax reporting obligations.
An Amendment to the Infrastructure Bill
The original infrastructure proposal sought to pay for its $28 billion worth of proposals by adjusting the tax code to list brokers as those who: (a) take responsibility for and regularly provide and serve as a digital asset transfer intermediary; and (b), in exchange for consideration, charge fees for each such transfer.
Senators Wyden, Lummis, and Toomey proposed an amendment that would allow the following to be exempt from this provision: virtual currency miners, cryptocurrency validators, protocol developers, and cryptocurrency wallet makers.
This morning, @EFF, @fightfortheftr and other civil society groups sent a letter calling on U.S. Senators to act swiftly to fix the overbroad cryptocurrency provision in the infrastructure bill. https://t.co/ZTV7UTHEeV
— EFF (@EFF) August 5, 2021
Although some legislators and opponents to the bill said that the wording in the bill seemed to compel crypto exchanges to record specific transactions, others questioned this assertion, arguing that any additional reporting requirements may impact developers, node operators, and miners.
Fight for the Future estimates that more than 9,000 people have contacted their representatives to express their support for the amendment offered by Senators Wyden, Lummis, and Toomey.
Another, Less-Crypto Friendly Amendment
The proposal’s original sponsor, Sen. Rob Portman (R-OH), submitted his own amendment in addition to Sen. Mark Warner (D-VA) (D-VA).
Under the competing amendment, validators on proof-of-stake networks like as Cardano and Ethereum 2.0 are exempted from the new reporting requirements, but protocol developers and other creators of cryptocurrency will still be subject to them.
He’s right. https://t.co/RwT2eU7Sc2
— Senator Pat Toomey (@SenToomey) August 6, 2021
This amendment threatens to undermine the cryptocurrency industry’s lobbying efforts. Critics of the proposed amendment argued that it was too wide and would cover not just custodial players such as exchanges but also non-custodial actors.
Those individuals belong to the category of mining participants on proof-of-work (PoW) networks and validating participants on proof-of-stake (PoS) networks. The legislation would have compelled them to provide 1099 forms to the IRS with customer data.