The tax reporting proposal creates a pivotal second for the crypto trade
A small chunk of the $ 1 trillion infrastructure bill sparked a spate of lobbying the cryptocurrency industry and created a pivotal moment for the sector’s presence in Washington.
While industry players have failed to change what they see as problematic language in a new tax reporting requirement for cryptocurrency brokers in the Senate version of the bill, they remain confident that House lawmakers can take steps to address their concerns. This optimism is fueled in part by the industry’s huge support from citizens who called their senators and asked them to change the language.
Industry proponents say the Senate version of the bill’s definition of a broker is too broad and software developers who do not have the customer information required to comply with the law would need to report that data for tax purposes.
Due to the decentralized nature of cryptocurrency, these employees would not be able to access such customer information even if they wanted to. This means that some companies may operate in a gray area or have to relocate their work outside of the US
While the Treasury Department could define the term more narrowly, some fear that too much is left to chance from one administration to the next. Industry officials say they support adequate taxation and want guidance on tax reporting, but also that the current language is off the mark.
While the determination was an unwelcome wake-up call for the industry, it has crystallized its influence in Congress as well. Fight for the Future digital rights organization said it had received more than 40,000 calls to Congress prior to voting on the Senate infrastructure.
“While that language was negative for the industry, it was positive in that it really brought everyone together and showed that crypto knows how to make some level of influence in Washington,” said Kristin Smith, executive director of the Blockchain Association. an industrial group. “I think this is the first time lawmakers have taken crypto seriously on a broad scale, so we can have a different level of conversation than in the past because they know so many of their voters care.”
Evan Greer, director of Fight for the Future, described the influx of messages to the Senate as “the biggest shake of basic energy I’ve seen in my entire career as a digital rights activist, other than net neutrality and the SOPA strike.” . the protest against the Stop Online Piracy Act in 2011.
And the legislature became aware of it.
“I got notes from the Senate offices like, ‘What is this about? We are inundated with phone calls,'” Greer said.
Now in the House of Representatives, bipartisan leaders of the Blockchain Caucus are trying to determine how to proceed, as it has become clear that the House leadership intends to pass the infrastructure package without changes.
Rep. Darren Soto, D-Fla., A co-chair of the Blockchain Caucus, said in an interview that he would propose two bills that reflect the proposed changes in the Senate aimed at changing the broker definition. These amendments did not get a vote in the Senate and since there is unlikely to be a chance for amendments in the House of Representatives, Soto hopes to pass the bills through the reconciliation process. House spokeswoman Nancy Pelosi said she wanted the chamber to vote on the infrastructure package by September 27.
Compared to the Senate, the House of Representatives benefits from a robust, long-standing blockchain caucus that is established in the Chamber and has around 30 members.
Some blockchain players have increased lobbying spending in recent quarters, although there is still no information on the voting period for infrastructure for the final quarter. However, the second quarter disclosures show that the Blockchain Association increased its spending 23% from the previous quarter to $ 160,000. The Chamber of Digital Commerce, which is a mix of tech and finance companies, increased its lobbying spending by more than 100% from Q1 through Q2, spending $ 62,000 in the second quarter.
Soto said the sheer attention the deployment of cryptocurrencies has received in Congress shows how far the industry has come.
“From a market perspective, it shows that it has arrived,” he said. “Now you have senators and powerful MPs in the House of Representatives arguing about how best to implement the deployment. It’s no longer an afterthought, it’s not an obscure technology. It’s one of the main debates right now as we make our infrastructure proposals working out.”
“For a long time this technology and community was simply dismissed as a hobby industry or as ‘crypto is just a speculative asset, there is no real use case,’ and I think that has changed,” said Perianne Boring, president of the Digital Commerce Chamber . “And I think more and more people are starting to understand how important this technology will be to the future of our economy and are taking it more seriously.”
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