U.S. Senate Bill Threatening Crypto Industry Moves Forward

Editor's note: This article, including its headline, was updated after publication to clarify where the crypto tax provision in the Senate's infrastructure bill currently stands.

The United States Senate has voted in favor of moving the current iteration of the $1.2 trillion infrastructure bill to a final vote on Tuesday morning. Crucially, the bill still includes language that cryptocurrency advocates believe would be hugely damaging to their industry in the United States.

There are currently two key amendments on the table, but neither has been included. As it stands, the Senate's infrastructure bill would impose new tax-reporting requirements on non-custodial actors, such as miners, validators, and software developers.

The Warner-Sinema-Portman amendment has been widely criticized by the crypto community for being too narrow in its scope. While the updated amendment would now exempt all miners and validators, it would leave out software developers from the tax-reporting exemption.

Senator Cynthia Lummis (R-WY), one of the co-authors of the rival Wyden-Toomey-Lummis amendment, which crypto industry insiders believe is broad enough to exempt all non-custodial actors, is the preferred alternative among crypto enthusiasts.

Following Sunday's vote to move ahead without any changes to the bill, Lummis tweeted her disappointment. “I understand my colleagues' positions. But real people are going to be hurt if we do not change the language in this bill,” she said. 

What happens next? 

The Senate allows for 30 hours of debate following a vote. This means that the Warner-Sinema-Portman amendment can be debated up until Tuesday morning, after which it would be signed into law. 

The Senate can still vote to change the infrastructure bill. Lummis and company remain committed to reaching an amendment that they believe will benefit the crypto industry. 

The Warner-Sinema-Portman amendment and crypto

The crypto community is broadly against the Sinema-Portman amendment because of the tax reporting requirements it imposes on non-custodial actors, who would struggle to comply.

If the Senate doesn’t change its stance on this amendment by Tuesday, certain non-custodial entities within the crypto industry—such as software developers—will have to work out how to report tax information that they do not currently record. 

Jake Chervinksy, general counsel for Compound Labs and one of the loudest crypto voices on this issue, tweeted his disappointment following the vote. “The Senate has voted 68-29 to end debate. We wanted a vote on the Wyden amendment first, or on a Wyden-Warner compromise, but no luck,” he said. 

Ted Cruz (R-TX) is one of the highest-profile Senators who has defended the crypto industry amid debate about the bill itself. On Saturday, he said the Senate was “on the verge of passing legislation that would be terrible for cryptocurrency.” 

Those in favor of the Warner-Sinema-Portman amendment see no extraordinary burden placed on the nascent crypto industry. Senator Elizabeth Warren (D-MA) said the bill is “not a direct tax on crypto, it’s simply a reporting requirement that’s in place everywhere else. That seems like the right approach.”