Media: U.S. Treasury lobbies for crypto-industry unfriendly provisions in the bill

The administration of U.S. President Joe Biden is opposing proposals to exclude certain types of crypto businesses from the bipartisan infrastructure funding plan. The Washington Post reports, citing its own sources.

According to the publication, Treasury Secretary Janet Yellen met with lawmakers to prevent weakening the rules for the industry.

The original wording in the bill stated that any person providing services for transferring digital assets and receiving compensation for it must report to the Internal Revenue Service about the activity of their users. Under certain interpretations, such requirements could cover miners and node operators on blockchains, wallet developers, liquidity providers in DeFi protocols, and other non-custodial actors.

For example, miners and node operators validating blocks with transactions do not have information about the substance of each transfer. They cannot know whether transfers are trading transactions and who makes them. Accordingly, the bill’s requirements are technically unfeasible even if desired.

Senators Ron Wyden, Cynthia Lummis and Pat Toomey proposed to exclude the indicated activities from the bill and not extend to them the rules applying to brokers. They agreed and co-author of the initial document Rob Portman, who had previously proposed an amendment excluding miners and sellers of equipment or software that allows individuals to control private keys. In Portman’s proposal, the status of PoS validators remains unclear.

In the White House, they stated support for Portman’s amendment.

“We are grateful to Chairman Wyden for his leadership in advancing a solution to this issue in the Senate. However, we believe that the alternative amendment proposed by Senators Warner, Portman and Sinema provides the right balance and marks an important step forward in promoting tax compliance,” The Washington Post quoted White House spokesperson Andrew Bates as saying.

Senators plan to approve the bill’s final version as early as tomorrow, August 7. Its aim is to fund $1 trillion for upgrading the U.S. infrastructure. It is expected that $28 billion in taxes will be raised from the crypto industry.

Adopting such a vague formulation, which the media reports the Biden administration is lobbying for, could drive many crypto businesses out of the United States or lead to closures.

Back in January 2021, former Federal Reserve chair and noted bitcoin skeptic Yellen headed the Treasury. In February, in her new capacity, she again criticised digital gold, calling it a speculative asset.

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