Controversial crypto rules in infrastructure bill to remain in place after House vote

Controversial new cryptocurrency tax requirements are likely to become law through a bipartisan infrastructure bill. The cryptocurrency community rallied to fix the language, but the House on Tuesday voted to go ahead with the bill, without any new amendments or opportunities to change it.

On Tuesday, House Speaker Nancy Pelosi (D-CA) and a group of moderate Democrats reached an agreement to approve a $3.5 trillion budget proposal, floor action on a bipartisan infrastructure deal and advance voting rights legislation by September. The agreement comes after a group of moderate Democrats pledged to vote down a multibillion-dollar social safety net package if it was approved ahead of a bipartisan infrastructure bill.

The deal, however, prevents any new amendments to the infrastructure package from being considered until the House approves a new rule that would allow them.

The deal comes as a devastating blow to the cryptocurrency community, which has worked over the past few weeks to remove language from infrastructure packages that could lead to heavy tax reporting requirements for wallet developers and miners. Several amendments were proposed in the Senate earlier this month, but they ultimately failed, leaving behind problematic language in the final bill.

“We are disappointed but not surprised,” Neeraj Agarwal, communications director at Coin Center, told The Verge. "It was always a long shot. That said, we have an opportunity to turn this into law in the coming months."

Several House lawmakers such as Reps Ro Khanna (D-CA) and Anna Eshu (D-CA) opposed the bill's broad definition of "broker", and the bipartisan Congressional Blockchain Caucus sent a letter to members of Congress calling for a fix. .

Nevertheless, cryptocurrency advocates may have a chance to influence the way regulations are implemented. The Treasury Department has reportedly said it will issue new guidance once the rules are passed, ensuring that it will provide exemptions to firms that do not act as brokers. But it is unclear whether Treasury Secretary Janet Yellen will support more industry-friendly regulations. In an interview with CNBC earlier this year, Yellen called bitcoin an "extremely inefficient" asset.

She continued, "This is a highly speculative asset and you know what I think people should be aware of is that it can be extremely volatile and I am concerned about the potential losses that investors may suffer." could."

The Treasury Department sought to placate cryptocurrency advocates, telling reporters that it would not interpret the language of "brokers" as miners or developers. Nevertheless, many cryptocurrency advocates argue that the promise is not enough and that future administrations may reinterpret the bill's underlying definition more broadly.

“I appreciate the Treasury’s intention to get this right, and we look forward to engaging in any regulatory process in the coming years,” Jerry Brito, executive director of Coin Center, said in a tweet on Wednesday. " Huh." "But please don't accept the statement that people in crypto are overreacting to this provision."

As the House moves forward on an infrastructure package, national security officials are sounding the alarm that cryptocurrency language could force illegal cryptocurrency transactions underground, according to the Wall Street Journal on Wednesday. Jeremy Sheridan, assistant director of the US Secret Service Investigative Office, told the Journal that more regulation "could drive illegal access and criminal actors into anonymous ways and corners of the Internet that would make it more difficult for law enforcement."