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The Senate didn’t find the time yesterday to vote on two rival amendments that determine which crypto entities must provide customer information to help pay for Joe Biden’s $1 trillion infrastructure bill.
It’s now expected that the Senate will convene to vote on the amendments at noon EDT (4pm UTC) on Sunday. The outcome could send ripples throughout the U.S. crypto industry, and executives fear that one of the outcomes could force decentralized finance companies out of the country.
One of the amendments, proposed by Senators Ron Wyden (D-OR), Cynthia Lummis (R-WY), and Pat Toomey (R-PA), and favored by the crypto industry, would exempt non-custodial entities, like Bitcoin miners and wallet operators, from handing over customer information to the tax authorities.
“We should not rope in people who are not actually running a centralized exchange,” Senator Toomey told Business Insider yesterday.
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"
— Joseph Zeballos-Roig (@josephzeballos) August 8, 2021
The other amendment, proposed by Senators Mark Warner (D-VA) and Rob Portman (R-OH), and favored by President Biden, has been significantly revised after the crypto industry threw cold water on it.
Originally, it exempted proof-of-work entities, like Bitcoin miners, but didn’t remove tax reporting obligations for proof-of-stake entities like Ethereum 2.0 validators. The crypto industry said this was unworkable because non-custodial entities don’t collect information about the people that use them.
Senators Warner and Portman have since revised their amendment to exempt both proof-of-work and proof-of-stake entities, but not any other consensus mechanisms, like Ripple’s “Federated Byzantine Agreement” or Solana’s “Proof of History” mechanisms.
The crypto industry doesn’t like the revision either, since it favors two consensus mechanisms for no clear reason.
Sen. Warner has changed his amendment to protect consensus mechanisms beyond PoW. A small positive step, but not nearly good enough.
It's just unreal that this is how Congress wants to handle major crypto legislation. We need time to make smart decisions. This process is broken. https://t.co/NftUjfnqHI
— Jake Chervinsky (@jchervinsky) August 7, 2021
A Bloomberg reporter said that Toomey and Warner were locked in conversation “near the well of the Senate” but no formal discussions took place.
“I want to crack down on tax cheats,” Senator Wyden told Business Insider yesterday. “I just don't want to destroy the innovation that comes from a decentralized network.
The Senate is considering dozens of amendments, and the unwillingness of some Senators to expedite a vote on final passage of the bill may push it “until Monday night into Tuesday morning,” according to Manu Raju, CNN’s congressional correspondent. But the crypto provision, and other amendments, are expected to be dealt with before the final passage.
Given the major flaws in the underlying bill’s unworkable and devastating crypto provision, I also filed a separate amendment to strike the whole thing, in the event a bipartisan deal can’t be reached.
We have to act now to stop this.
— Ted Cruz (@tedcruz) August 7, 2021
And if Senators vote against both crypto amendments, other amendments could be tabled. Senator Ted Cruz, for instance, has filed his own amendment if Congress can’t reach a consensus.
Alternative amendments, such as Cruz’s, could be necessary if both amendments fail because striking crypto from the bill isn’t politically viable, said Jerry Brito, of DC-based crypto think tank Coin Center.
4/ So, an amendment that strikes the crypto provision, which is scored to bring in ±$30 billion, is not something that would ever stand a chance of passing. To work on such a thing is a waste of time–as much as it would be my preferred option.
— Jerry Brito (@jerrybrito) August 7, 2021
The money has to come from somewhere, and Congress isn’t going to let crypto threaten the bill, he said.