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Aug 7, 2021

1) Even more updates on the crypto amendments in the Senate infrastructure bill! Context: twitter.com/SBF_FTX/status

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2) Last we checked, there were a number of competing amendments for the crypto tax section of the senate infrastructure bill. Where are we now?

3) Well... In some sense, nothing has happened. There have been any votes on the amendments, or new ones proposed. Instead, there have been procedural fights on the bill.

4) Which probably brings up some context that is relevant here: it's a $1 trillion bill. The crypto amendment is $30b. It's not irrelevant, but it's small. There's a larger world out there.

5) So there's now a fight over expediting the bill in general. Generally, slowing down the bill would be good here for the crypto amendment, to give more time to hash things out! But the means of objecting to expediting is taking up all the time:

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Mike DeBonis

@mikedebonis

Aug 7, 2021

Where things stand on the infra bill: -Lots of people want amdmt votes, which will require unanimous consent. -Dems want to speed things up in return for consenting to amdmt votes. -Hagerty says he's OK with amdt votes but is firmly refusing to speed things up. Thus:

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6) Who's "fault" is this? IDK, it's complicated. It depends on which frame of reference you start from. Hagerty is fighting to get more time for amendments, but in doing so is taking up the remaining time for amendments.

7) So, what's most likely to happen now is that there won't be much time for amendments, and there might not be sufficient quorum to even bring them to vote; if they have to get through the committee, they'll be easy to veto there.

8) Which gets to another important point. The first thing that crypto had to do here was make sure that Washington was aware there was a provision in the bill that needed clarification. That was successful! Washington is well aware now.

5:49 AM · Aug 9, 2021Twitter Web App

9) But there are competing interests on the bill, and the multiple different amendments flying around are confusing. Republican senators have a clear line: they want to slow down and edit the bill anyway; and the majority of their members would be happy with Wyden/Lummis/etc.

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10) Majority leadership is more likely caught between a rock and a hard place here. There are competing factions (Wyden / Yellen), and it's a small piece of a large bill. Their goal is to get the bill passed and move on with business, and not have to deal with this battle.

11) And so more and louder voices saying the bill's crypto provision is bad might not be what's important right now. The more difficult this is, and the more contentious, the more leadership is incentivized to say "fuck it, no amendments, we have to move on".

12) What's really needed here is clear, reasonable, fair compromise that can create a compelling way forward. I'm not sure what that is! But if it were *me* drafting the bill, I guess I'd try to take a step back and try a new approach.

13) Maybe try something like this? ---- a) To clarify, the original language means that centralized US-servicing crypto exchanges, for instance Coinbase, Kraken, FTX US, Gemini, Binance US, etc. will be treated as a broker for 1099 purposes

14) b) To further clarify, neither the original bill text nor this amendment are taking a position either way on any tax related duties of people or companies primarily involved in blockchain validation, noncustodial wallets, or other areas of decentralized crypto finance.

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15) The goal here: (i) make it clear that centralized US person facing crypto exchanges have to be filing 1099s, which makes sense (ii) kick the can down the road on messier questions

16) Kicking the can down the road isn't ideal. But it's better than having to hash out consensus protocols, noncustodial wallets, developers, and other things at the last minute. And at least it's clear what the bill would/wouldn't do, rather than leaving it vague.

17) Now, probably this has already been floated, and rejected for various reasons. Probably

@SenSchumer

has already tried clarifying that the bill applies to exchanges and punting on DeFi/etc. until a future bill, and that didn't get everyone on board.

18) But, fundamentally: the biggest thing right now isn't for crypto to "get its voice heard". It's to come forward with reasonable, good faith compromises, and make it clear that's the goal.

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