A bipartisan group of senators says it has reached a compromise on cryptocurrency reporting in the infrastructure bill

Bloomberg 2021-08-10

Context & Ripple Effects

The reported compromise followed last-minute Senate negotiations over crypto oversight. It mattered because the infrastructure bill was advancing with a cryptocurrency tax provision that critics viewed as overly broad.

The Senate subsequently sent the bill to the House with that disputed provision intact, and the enacted measure later imposed sender-reporting requirements for certain $10,000-plus digital-asset receipts. The episode marks an early attempt to narrow crypto rules through bipartisan drafting rather than remove reporting obligations outright.

First-order effects

The bipartisan group gained a negotiated position on cryptocurrency reporting, while crypto businesses still faced a bill whose reporting language had drawn criticism for its breadth.
The Senate’s passage of the infrastructure bill shifted the practical focus from the compromise talks to compliance with the bill’s digital-asset reporting provisions.

Second-order effects

Digital-asset recipients handling qualifying large transfers must collect and report sender details, pushing reporting obligations toward the businesses and intermediaries that receive those assets.
The broad provision created pressure for narrower legislative fixes, reflected in the later bipartisan proposal to exempt sub-$50 crypto transactions from taxation.

Third-order effects

Crypto policy is moving toward a framework in which transaction reporting is accepted as a baseline while lawmakers negotiate exemptions and definitions around its edges.
If bipartisan crypto coalitions continue to form around specific use cases, future legislation is more likely to separate payments, small transactions, and larger reportable transfers than to treat cryptocurrency as one category.

The trend: US crypto legislation is evolving from broad tax-reporting mandates toward targeted bipartisan carve-outs for particular transaction types and products.

Discussion

@ronwyden Ron Wyden on x
We've been working hard to get a deal. I don't believe the cryptocurrency amendment language on offer is good enough to protect privacy and security, but it's certainly better than the underlying bill. Majority Leader Schumer says he won't block a unanimous consent request on it
@senrobportman Rob Portman on x
I'm pleased to announce that Senators Warner, Toomey, Sinema, Lummis & I have reached an agreement on an amendment to clarify IRS reporting rules for crypto transactions w/o curbing innovation or imposing information reporting requirements on stakers, miners, or other non-brokers
@elonmusk Elon Musk on x
@brian_armstrong @MarkWarner Agreed, this is not the time to pick technology winners or losers in cryptocurrency technology. There is no crisis that compels hasty legislation.
@jstein_wapo Jeff Stein on x
Scoop: Treasury Secretary Janet Yellen has been privately lobbying lawmakers against Wyden-Lummis-Toomey crypto amendment, as WH seeks to fend off push to limit new regulatory authorities, per sources familiar W/ @JaxAlemany https://www.washingtonpost.com/ ...
@jerrybrito Jerry Brito on x
1/ There is now a compromise amendment being offered by Senators Toomey, Lummis, Warner, Portman, and Sinema that we think all senators should support.
@jstein_wapo Jeff Stein on x
Here's the text of the new crypto agreement, assume someone has already tweeted this but need to make sure my followers see it as well https://twitter.com/...
@tedcruz Ted Cruz on x
🚨Crypto got screwed tonight.🚨 There's a partisan disagreement on spending, so Dems objected to ALL further amendments. That means NO vote on Wyden-Lummis to lessen the damage this bill will do to crypto, & NO vote on the Cruz amd. to repeal the new crypto rules altogether.
@brian_armstrong Brian Armstrong on x
1/ There are a few key moments that define our future. One is happening now in the Senate w/ the infrastructure bill. At the 11th hour @MarkWarner has proposed an amendment that would decide which foundational technologies are OK and which are not in crypto. This is disastrous.
@jerrybrito Jerry Brito on x
Senator Warner has revised his amendment yet again. He now excludes proof-of-work and proof-of-stake, but not any other consensus mechanism. I am speechless. Now they're picking 2 winners? There are other consensus mechanisms! Why do this? https://twitter.com/...
@caitlinlong_ @caitlinlong_ on x
Yep & we've proven our power doesn't stem from lobbying money. Our power= there are ~50 million of us (in every Congressional district), we can self-organize fast when we want to & we're not afraid to call out bad DC policy that doesn't understand our tech https://www.washingtonp…
@jstein_wapo Jeff Stein on x
Can confirm Treasury was consulted on this crypto agreement and does not oppose —> https://twitter.com/...
@jerrybrito Jerry Brito on x
2/ It tightens the expanded definition of “broker” sufficiently that it would be difficult to argue it covers protocol devs who only write and publish code. https://twitter.com/...
@a16z @a16z on x
Read the letter we sent Congress supporting the @RonWyden @SenLummis @SenToomey amendment to the infrastructure bill regarding reporting requirements on crypto transactions. This bipartisan amendment is the right solution to address our shared concerns. https://a16z.com/... https…
@jakesherman Jake Sherman on x
Quick thought before this senate vote series: crypto is only going to become more scrutinized by congress. This is the beginning. Congress is late to it, no doubt, but this will be a bigger focus in the future.
@nikhileshde Nikhilesh De on x
I've been getting qs so here's what I know: As of 5:15pm ET, literally anything seems possible re: crypto tax reporting provision. Might see votes on amendments, might not, might see a compromise, might see the Senate just move to vote on the current bill without any amendments.
@igorbobic Igor Bobic on x
It is both amusing and sort of ridiculous how the Senate stumbled into a very technical and complicated debate about crypto mining while working on an infrastructure bill.
@jstein_wapo Jeff Stein on x
Worth noting that even if we get a Wyden-Warner-WH crypto agreement it may not wind up in the bill bc there may not be amendments allowed, for complicated Senate procedural reasons @TonyRomm has explained to me but that I am too dense to understand
@fightfortheftr @fightfortheftr on x
Together we've driven more than 35,000 calls to Senators saying #DontKillCrypto. We're not even keeping track of tweets and emails. It's unacceptable for elected officials to ignore their constituents. Keep calling. Keep tweeting. Make them listen. https://www.fightforthefuture.o…
@jack Jack⚡️ on x
To @RonWyden, @SenLummis, @SenToomey, @MarkWarner, @SenRobPortman, @SenatorSinema, @TedCruz, respective staff & everyone who's worked on the Infrastructure Bill “Crypto Tax Reporting” provision: thank you for your work to get this right. May we offer a workable simplification?
@evan_greer Evan Greer on x
Good thread about what happened in the Senate and what happens next for the #DontKillCrypto movement. The fight now moves to the House and the team @fightfortheftr has updated this tool so you can easily contact your members of Congress with a few clicks. https://www.fightforthef…
@katie_haun Kathryn Haun on x
We support the Toomey-Lummis-Warner compromise amendment to the infrastructure bill. We've created a fact-sheet that explains why every Senator should back this amendment. https://a16z.com/... https://twitter.com/...
@withouttherope David Moss on x
https://www.bloomberg.com/... “Toomey said the proposal would clarify rules on who is a broker for cryptocurrency and ensure that it wouldn't sweep in software developers, cryptocurrency transaction validators, node operators or other non-brokers.”
@fightfortheftr @fightfortheftr on x
Let's be perfectly clear: This amendment improves the (terrible) #cryptocurrency language that should never have been included in the #InfrastructureBill in the first place. But it still doesn't go nearly far enough to protect software developers & human rights. Keep pushing! htt…
@eff @eff on x
EFF remains deeply concerned about the rights of software developers to write and publish code, as well as the privacy rights of cryptocurrency users. Thank you for your leadership on this issue, Senator @RonWyden. https://twitter.com/...
@peterdhans82 Peter Hans on x
This means that the Senate can offer the amendment to the bill without a vote, though if anyone objects, it's out. Usually UC is for mundane procedural issues, though this might be so new that no Senator wants to be seen as the one standing in the way of innovation https://twitte…
@tonyajoriley Tonya Riley on x
Wyden's statement on the amendement. He says it doesn't go far enough to protect privacy: https://twitter.com/...
@senlummis Senator Cynthia Lummis on x
We've been working all weekend to come up with a compromise to address the digital asset broker issue in the Bipartisan Infrastructure Framework. While it's not perfect, it protects innovation and doesn't choose winners and losers.
@sentoomey Senator Pat Toomey on x
I'm glad to announce @MarkWarner, @SenLummis, @SenatorSinema, @senrobportman and I have reached an agreement on an amendment that fixes crypto reporting requirements in the infrastructure bill. Full details: https://www.banking.senate.gov/ ... https://twitter.com/...
@davidgokhshtein David Gokhshtein on x
SEND IT TO THE MOON! 🚀🚀🚀 Our voices matter! https://twitter.com/...
@rleshner Robert Leshner on x
🚨 YOU can help save crypto, by reaching out to your Senators RIGHT NOW, and ask them to unanimously support this amendment. https://www.fightforthefuture.org/ ... https://twitter.com/...
@andrewyang Andrew Yang on x
This is a positive development - I hope this amendment passes. 👍🚀 https://twitter.com/...
@jaxalemany Jacqueline Alemany on x
.@SenLummis: “The silver lining is we found out who in the Senate is interested in this subject who maybe previously didn't know anything abt [crypto].. we were finally able to illustrate that there's a lot of ppl interested in digital assets & now have contact w their Senator.
@tonyajoriley Tonya Riley on x
Supporters include Democrats, Republicans and members of the Treasury Department. Toomey says it's not a perfect solution"But it is much better than the underlying text."
@jstein_wapo Jeff Stein on x
We still don't know if there will be a vote on this, from what I can tell Biden admin has been adamant from start that they've never had any intent to impose reporting requirements on developers and miners w/o 1099 info to begin with
@deitaone @deitaone on x
YELLEN SAYS CRYPTOCURRENCY AMENDMENT IN SENATE INFRASTRUCTURE BILL ‘WILL MAKE MEANINGFUL PROGRESS ON TAX EVASION’
@brad_polumbo @brad_polumbo on x
I don't see why one would ban senators from holding crypto any more than you would ban them from purchasing Euros or pesos. https://twitter.com/...
@susanlitv Susan Li on x
U.S. senators reach #bipartisan agreement on #cryptocurrency reporting Senator #Toomey says the bill would clarify rules on who is a broker for #crypto & ensure that it wouldn't sweep in software developers, validators or others Has backing of #Treasury https://www.bloomberg.com/…
@business @business on x
NEW: The bipartisan groups of senators who have been haggling over a cryptocurrency reporting requirement in the $550 billion infrastructure bill have reached a compromise, though it's not yet clear it will get a vote https://www.bloomberg.com/...
@mackhawk Mackenzie Hawkins on x
Monday morning crypto update: They have a deal! (Notably absent: Sen. Wyden, who proposed a different version of the amendment) Toomey says group will try to bring it up via unanimous consent today, which requires all 100 senators to agree to hold a vote. https://www.bloomberg.co…
@jchervinsky Jake Chervinsky on x
We need to have a longer conversation about why Congress is delegating its legislative power to unnamed, unelected officials in the Treasury Department, but that can wait until after the vote on this amendment. https://twitter.com/...
@tedcruz Ted Cruz on x
The result? The Senate's going to inflict billions of dollars of damage on the growing & exciting crypto industry & drive much of it overseas. There aren't 5 Senators who understand much of anything about crypto.
@jstein_wapo Jeff Stein on x
Tl;dr — Wyden appears to be getting to yes on a deal to exempt a broader # of crypto players from new reporting requirements. But bc of Senate rules any 1 Senator could still block. Will one Senator step forward to become crypto's new public enemy number one? Who would it be? htt…
@carnage4life Dare Obasanjo on x
It looks like the reporting obligations which will require every player in the crypto ecosystem to track & report people's earnings for tax purposes including protocol developers will remain in the Senate version of the bill. Next battleground will be the House version of bill. h…
@jhweissmann Jordan Weissmann on x
Ban Senators from owning individual stocks or crypto, for the love of God. https://www.politico.com/... https://twitter.com/...
@tedcruz Ted Cruz on x
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. It's reckless & harmful.
@mg Matt Galligan.eth on x
What are the motivations behind picking technologies to build into this amendment? It's like Congress coming out and saying you can code with Java + Python but leaving all other languages out. https://twitter.com/...
@ivanthek @ivanthek on x
Every member of Congress should immediately disclose their interest in cryptocurrencies and adjacent businesses. https://www.washingtonpost.com/ ...
@hackingbutlegal Jackie Singh on x
This is the first real fight for the regulation of cryptocurrency at a federal level. Here's a good overview of what is happening: https://www.washingtonpost.com/ ...
@nickcini Nick Mancini on x
I cannot believe the year is 2021 and instead of Congress actually debating life changing societal remedies they are bickering over the difference between $10 billion in #crypto taxes per year. I was a fan of the Biden administration, but respect is quickly being lost. https://tw…
@milessuter Miles Suter on x
It's *so* crazy that this is how legislation is made in DC. These are incredibly complex, technical and impactful issues. They deserve thorough contemplation, debate & public discussion in order to ensure the policy put in place optimizes future American prosperity & innovation
@iampaulgrewal Paul Grewal on x
Each and every United States Senator should be clear: the millions of Americans who buy, sell, use and care about crypto are staring at this amendment fiasco in disbelief. We vote, donate, canvass and knock on doors. We remember when leaders do their jobs— and when they don't.
@eric_lombrozo @eric_lombrozo on x
Nah, the Senate got screwed. The bill made clear just how incompetent and dysfunctional the institution is and got lots of incredibly determined and passionate activists from around the whole world riled up. And the Honeybadger still don't daf. https://twitter.com/... https://twi…
@iohk_charles Charles Hoskinson on x
There you have it folks. Chuck Schumer fucked us all. It's one thing to disagree, but he didn't even let the senators vote. Time to move on to the house. 435 congress critters. Let's light up the phones https://twitter.com/...
@jhweissmann @jhweissmann on x
Ah. Honestly, reasonable result. Just means there's gonna be vague-ish statutory language and lots of lobbying during the Treasury rule-making process. https://twitter.com/...
@novogratz Mike Novogratz on x
I don't often agree with @tedcruz but he is pretty spot on. Crypto started as a movement of people who didn't trust government and centralized authority. The embarrassing actions of our Senators and the White House reinforces this lack of trust. Shameful. https://twitter.com/...
@mdudas Mike Dudas on x
“The Treasury Department had been involved in the drafting of the latest amendment” https://www.bloomberg.com/...
@el33th4xor Emin Gün Sirer on x
The Senate is giving us a picture perfect lesson on why politicians cannot be trusted to “regulate” technological innovation. https://twitter.com/...
@tonyromm Tony Romm on x
pessimism about amendments notwithstanding, this Senate bill — with or without crypto provisions that some dislike — is likely to see some changing in the house anyways.

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