How the cryptocurrency industry gained influence in Washington and became one of the biggest stumbling blocks holding up the passage of the infrastructure bill
Washington Post
Context & Ripple Effects
By August 2021, an industry that had barely registered on K Street had become powerful enough to stall a $1 trillion spending package. The fight was over a crypto tax reporting provision that critics called too broad — and the holdup itself proved the point of this piece: a sector once dismissed as fringe could now bend Senate floor time around its concerns. The bill ultimately cleared the Senate 69-30 with the provision intact, per related coverage of the $1T infrastructure bill vote.
What followed validated the article's framing. The fight galvanized an eclectic bloc of pro-crypto lawmakers from libertarians to tech utopians, and by early 2022 crypto executives were among the top donors to some members as rulemaking loomed. The arc runs straight into the FTX collapse that left those same lawmakers wondering how regulation failed.
First-order effects
The industry's last-minute lobbying directly slowed passage of the infrastructure bill, forcing the Senate to work past objections to the crypto tax provision before sending the bill to the House.
Members who took up crypto's side gained a visible constituency overnight, converting a niche policy dispute into a marker of political alignment.
Second-order effects
With federal rulemaking now inevitable, crypto firms poured donations into congressional campaigns, making industry cash a key funding source for some lawmakers ahead of any regulatory push.
The episode gave financial regulators a template for treating crypto as a taxable, reportable part of the financial system rather than a parallel one — the very framing advocates would later argue made US operations unfeasible.
Third-order effects
If the pattern holds, crypto's Washington influence becomes self-undermining: the same lobbying muscle that blocked broad tax language in 2021 drew the scrutiny that produced the pro-crypto caucus and then the post-FTX reckoning over whether Congress moved too slowly.
Structurally, the industry crossed from outsider to stakeholder — meaning future legislation gets written with its input, but its failures also get attributed to the access it bought.
The trend:Cryptocurrency is consolidating its transformation from regulatory outsider into an entrenched Washington interest group whose influence invites the very oversight it lobbies against.
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…
Caught up w/Toomey on crypto talks, some issues remain unresolved: “Someone in the business of running a centralized exchange should be required to report transactions for their customers.. but we should not rope in people who are not actually running a centralized exchange”
If we can't strike the entire provision so we can have proper hearings and deliberation, then let's simplify the definition of broker to what really matters: where digital assets are exchanged for fiat currency. Broker = Fiat-to-Crypto Exchange.
Spoke w/Wyden about ongoing crypto tax talks: “I continue to feel very strongly I want to crack down on tax cheats and people associated with these centralized programs, crypto exchanges.. I just don't want to destroy the innovation that comes from a decentralized network”
.@mcuban tells The Washington Post on current crypto debate: “Shutting off this growth engine would be the equivalent of stopping e-commerce in 1995 because people were afraid of credit card fraud” Story w/ @tcfrankel @JaxAlemany @hshaban https://www.washingtonpost.com/ ...
“An intense infrastructure bill brawl between Bitcoin advocates, Congress and the White House has revealed a new power player in Washington that's starting to find its footing: the cryptocurrency lobby” In retrospect, it was inevitable. https://www.politico.com/...
1/ Dear Senators, still confused about why the @markwarner amendments (yes, all 5 of them) fall short of fixing the #crypto provision in the #infrastructurebill? Here are 3 things you need to know.
Forcing reporting rules on Americans who develop software and hardware, who mine and secure the network, or who run nodes to build resilience and efficiencies, is an impossible ask that will only drive development and operation of this critical technology outside the US.
The question is no longer: “Is crypto a fad?” It's now a question of: How do we incorporate, tax and regulate this growing and important industry? https://twitter.com/...
On today's front page w/@tcfrankel, @JStein_WaPo & @JaxAlemany. In the contest over the infrastructure bill, the crypto industry and its allies sprung into action, mounting a campaign on Capitol Hill, and proving their newfound power as a lobbying force https://www.washingtonpost…
If you feel this doesn't go far enough, I'd argue that this at least gets you to 90% of goal. For the remaining 10% of edge cases, let's make a proper well-informed law through committee hearings with witnesses on both sides of the debate.
“Any industry wants to be involved in regulation discussions,” said @Reid_Yager, a former lobbyist and current director of communications at @BlokhausLLC, a blockchain marketing firm. “But explaining all this to a septuagenarian lawmaker is a huge challenge.” https://twitter.com/…
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?
~20% of US Millennials own crypto. Only 37% own stocks. Imagine Senators and the White House trying to kill the stock market for half of all Millennial shareholders. How do you think that demo would vote in the next election cycle?
An alliance between digital rights groups and powerful corporate interests held up the US infrastructure deal to minimize crypto regulations. “The parallels between cryptocurrency's current battle and how ‘Big Tech’ once approached regulation are notable."https://www.washingtonpo…
What do Trump staffer Mick Mulvaney, the lefty group Fight for the Future, & Mark Cuban have in common? A fight over a provision tucked into the infrastructure bill revealed an unlikely crew united by skepticism of cryptocurrency regulation. https://www.washingtonpost.com/ ...
The effort to stop this crypto amendment has been a good example of how tech and its supporters wield false narratives that sound attractive and empowering, but actually function to protect corporate power and fight regulations that would constrain it. https://twitter.com/...
This would be infinitely more effective for the IRS to collect taxes and the government to legitimately score revenue for the infrastructure bill. As it stands, no one running a node can comply with filing 1099s, so there would be no additional tax revenue due to this law. https:…
... or, I have an idea: why not raise the stakes on individuals who do not report crypto gains by substantially increasing penalties? This seems like a better idea than trying to impose solutions that will literally be impossible to comply with.
END/ So.... we urge you to support the @ronwyden-@senlummis-@sentoomey amendment and oppose the @markwarner amendment. Keep crypto innovation here in the US. Crypto. Here for Good. (I promise you it really is.)
10/ This type of policy shouldn't be rushed or forced into must-pass legislation. We'd love to start back at square one... but instead we find ourselves here.
I love how senators just have to say “let's fuck this random stuff up” and then all the people in that industry pour money into their coffers to convince them not to. It's a direct analogy to “nice store you have here, what a shame if something bad were to happen to it”
The crypto voting block is real. We are no longer a fringe community of technologists, but a rapidly growing industry of millions of people that is fast becoming a major growth engine of the US economy, and will be for decades to come. https://www.washingtonpost.com/ ...
There are tens of millions of people around the world voluntarily working together to build a better future that stands on the bedrock of freedom and transparency. https://www.washingtonpost.com/ ...
The NRA has a chokehold on gun control regulation with about $3M-$5M in lobbying. The top 5 defense contractors spend about $50M/year to direct trillions in defense spending. The crypto community has the wealth & passion to have similar impact on government. The dragon is awake. …
US politicians have grabbed a tiger by the tail. The crypto community spends millions on JPGs and will have no qualms spending significant amounts of money going after politicians for effectively trying to ban crypto. At least one major politician has already figured that out. ht…