US Legislative War on Bitcoin :On the brink of disaster

By: Bharggavi Ssayee

August 11, 2021 10:43 AM

In recent days, the US Senate has been igniting the subject of cryptocurrencies. A provision introduced (discreetly) in a very important infrastructure law could have violently called into question the entire future of the crypto-asset sector. Fortunately, the camp of Bitcoin and crypto allies was able to react quickly, and seems (for now) to have largely limited an announced disaster.

An attempt to kill the crypto industry

The “infrastructure bill” which is being discussed in the US Senate is an infrastructure bill deemed essential for the recovery of the United States after the coronavirus health crisis. In particular, the legislative package must be matched with funding of $ 1 trillion.

Buried in this important discussion was a provision introducing even stricter regulation of cryptocurrency-related service companies, including new tax reporting requirements, and new taxation.

The most worrying being in particular the very large scope of actors covered by this provision, which could potentially target Proof of Work blockchain miners, Proof of Stake blockchain validators (stakers), and even developers of crypto projects.

Fortunately, a bipartisan group of Democratic and Republican senators was quick to counterattack, tabling a First Amendment to this provision.

Several amendments later, was a compromise found?

This sling to save the cryptos was led by Senators Pat Toomey and Cynthia Lummis. They held a press conference on August 9 to explain that a "compromise amendment" had been reached after heated debate.

“There is a broad consensus that digital asset exchanges behaving like brokers should be required to report trades as other types of brokers already do. (…) Some have expressed concerns about the underlying text of the infrastructure bill, suggesting that it would result in the application of reporting requirements far too broadly (…) We worked with the department of the Treasury to clarify the underlying text and ensure that those who do not act as brokers will not be subject to the reporting requirements of the bill (…) ”.

If this last amendment is well incorporated and voted by the Senate, the law will still have to pass before the House of Representatives (the House) before the final signature of Joe Biden.

Suffice to say that the cryosphere and its defenders will have to remain very vigilant for the next few days, because its detractors are clearly not taking a vacation (and even taking advantage of it). It must be said that indeed, some politicians have a fierce hatred of Bitcoin, to the point of wondering what can really motivate such hostility.