Last-gasp Infra Bill Compromise May not Come Fast Enough to Save US Crypto
It could be a case of close but no cigar for the United States crypto sector – with two rival groups of senators agonizingly close to a compromise on a chaotic and much-maligned infrastructure bill on the cards, just as time is running out.
The Senate had hoped to vote on the measure on Saturday, but ultimately ran short on time, leading to a vote to wrap up debate and vote by the early hours of Tuesday (August 10).
In the hours before the vote, senators will need to decide which (if either) of two competing crypto-related amendments to bolt on to the bill, which has been designed to raise money for hundreds of billions of USD worth of public spending projects.
The bill will seek to force more crypto players than ever to report their activities to the Internal Revenue Service, classifying the likes of crypto software developers, validators and miners as “brokers.” This could squeeze some USD 28bn out of the crypto industry, with some warning crypto players would need to move overseas if they want to stay afloat.
Prominent figures in the crypto community have backed a proposal from the Senate Finance Committee Chairman Ron Wyden and the Republican Senators Pat Toomey and Cynthia Lummis, while the White House’s press office has publicly backed a separate amendment that excludes proof-of-work miners from “broker” status – but not proof-of-stake validators. The latter is the brainchild of the Republican Senator Rob Portman and the Democrats Mark Warner and Kyrsten Sinema.
Over the weekend, the two parties appear to have spoken about a possible compromise, which could eventually lead to a consolidated proposal.
Bloomberg quoted Wyden as stating that he and the rival group were “still talking,” although the media outlet stated that he “declined to discuss what issues still are unsettled.”
However, the report noted that “the last-minute frenzy to reach a deal may prove to be fruitless” if the senators fail to reach an agreement before the bill’s vote comes up.
A 30-hour debate time period came into force on Sunday night, after which Senators must hold a vote on the bill.
Lummis was quoted as stating,
“I don’t know if they will allow, the floor managers and the leadership, will allow us to offer our amendment in the second 30 hours, but we’re going to find out.”
A somewhat unlikely would-be champion of the crypto sector has emerged in the shape of the outspoken Texas Senator Ted Cruz, who issued an ominous update.
Cruz went on a Twitter tirade against the bill’s supporters, writing that the Democrats had “objected to all further amendments” on the draft legislation. That, he claimed, meant that there would be “no vote” on the Wyden-Lummis-Toomey amendment, or on his own amendment which involves “repealing the new crypto rules altogether.”
However, on Monday, both Lummis and Wyden tweeted that they're still expecting to get a deal.
Disagreement about conditions in the bill has left the Senate in a state of “deadlock” as some members question just how long the draft legislation and a total of 22 amendments (including the two crypto-related measures) will be debated prior to a vote.
CNN reported that the deciding Senate vote “is now expected sometime in the early hours of Tuesday morning,” and that while some Senators are “confident the bill will pass,” further spanners have been thrown into the works by the likes of Republican Senator Todd Young, an initial supporter of the bill who now states he will vote against it, claiming he was not “comfortable with a number of the Democratic priorities contained in” it.
On Twitter, Lummis issued a stark warning, writing that the United States’ “position as the global financial leader is a privilege, not a right.” She added:
“Other countries have a head start on us in the development of digital assets. If we get this wrong, we handicap ourselves and put our future prosperity at risk.”
Cruz, meanwhile, blasted the Democrats and the Senate, writing that “The Senate is going to inflict billions of dollars of damage on the growing and exciting crypto industry and drive much of it overseas. There aren’t five Senators who understand much of anything about crypto.”
He called the bill “reckless and harmful,” and added:
“What the Senate said tonight: Let’s tax the hell out of something we know nothing about, so we can pass a giant bill we haven’t read, and spend the American people’s money on stuff we can’t afford.”
Jake Chervinsky, the General Counsel at Compound Finance and one of the United States’ crypto community’s most vocal proponents of the Wyden-Lummis-Toomey amendment, offered some Twitter analysis, claiming that senators “might still amend the bill before” Tuesday.
Chervinsky also added that the crypto world was “probably” unlikely to “get the Wyden amendment we saw before,” due to the fact that the Senators “are now working on a compromise.”
Should the measure pass the Senate unamended and head to Congress, however, he opined that the “process is hard to game out.”
The Messari founder and CEO Ryan Selkis wrote,
“At this point, it looks unlikely [the] Wyden [proposal] will see any floor time. That means this piece of shit [the bill] gets flung back to the House, which can offer its own amendments. If there are differences, the two versions get ‘conferenced.’”
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(Updated at 16:26 UTC with additional statements by Ron Wyden and Cynthia Lummis)