The crypto industry is about to see a major change in the US, as the Senate talks regarding the controversial crypto tax bill have ended with a decision not to amend the original bill. Instead of changing it in any way, the Senate is simply going to put it to another vote, likely with the same results.
As some may remember, the bill’s goal is to raise around $28 billion for infrastructure funding by way of expanding crypto taxation. Any crypto company that might fall under the category of a broker will be legally obligated to report its users’ crypto earnings.
The confirmation that the bill will not be changed came earlier today, when Jake Chervinsky, the general counsel to Compound Finance, decided to tweet the Senate’s voting procedure. The Senate had voted 68 in favor of the bill, vs 29 who were against it. This way, there is no more any debate about what might or will happen. The final vote is coming this Tuesday, August 10th.
What’s the problem?
Interestingly enough, the Senate’s debate regarding the crypto tax bill has stalled quite a bit, only for the final version of the bill to be completely unamended. The issue with the bill is that the language it is using to describe what a broker is is rather broad. The issue has sent major shockwaves throughout the industry, as analysts pointed out that many entities, such as miners, stakers, network validators, software developers, and others can all be affected by it.
Essentially, analysts argue that these individuals could be subjected to third-party tax reporting requirements, even though they don’t possess personal information on their counter-parties.
Some in the Senate recognized the problem as well, so Senators Rob Wyden, Pat Toomey, and Cynthia Lummis, proposed an amendment that would narrow down the language and define certain concepts in the crypto industry better. This would result in allowing the bill to target those entities that it should target, without leaving the doors open to go after those that shouldn’t be considered brokers.
Essentially, all that the Senators wanted was for crypto miners, validators, and software developers to be excluded from the bill. Unfortunately, the majority of their peers have decided to back a competing amendment from three others, including Mark Warner, Rob Portman, and Kyrsten Sinema. This one would only exempt miners, PoS validators, and wallet providers.
The split in the Senate
On August 8th, Lummis tweeted that both sides have found themselves at an impasse and that this break will last for 30 hours. This is the time during which senators have to consider the bill before they take the final vote.
However, Lummis says that there are some senators who would want to keep focusing on the infrastructure of the bill for the following 30 hours. Focusing on the bill in such a way is only going to raise awareness regarding its price tag, as the Senate Majority Leader, Chuck Schumer, stated. Schumer, on the other hand, wants to be done with the vote as quickly as possible and move on to the next legislation.
Still, Lummis added that the crypto community would probably be satisfied with the outcome if senators got the chance to vote on the amendments.
Now, it remains to be seen what the Senate will decide tomorrow, and how exactly that might reflect on the crypto sector. If the bill gets passed tomorrow, the legislation would still not be a proper law. According to the procedure that each bill has to follow, its next stop would be clearing the house, before it can get mandated as law. This can provide crypto users with an opportunity for the crypto provisions to be revised.
All in all, the situation is not great, but it is also not as bad as some have expected. Cryptos are still moving towards greater adoption and the industry is becoming more and more relevant, but also more and more regulated.