The State of Crypto: The Infrastructure Bill's Crypto Provision Now Relies on Non-Crypto Issues

The United States House of Representatives will begin discussing a bipartisan infrastructure measure next week, but Democrats have threatened to vote against it for a variety of reasons. This implies that the fate of a crypto tax provision may hinge on the passage of another measure in the Senate.

(Endless) infrastructure week

The storyline

Last Monday, the Senate delivered the House of Representatives its version of the infrastructure package. Next Monday, the House will return from recess to attempt to approve the measure. While we may be focused on the proposed law's crypto tax section, factors unrelated to crypto may decide whether the measure is approved or if the crypto language is changed.

Why does it matter?

Last week, the crypto sector banded together to attempt to alter the infrastructure bill's crypto tax provision. This attempt failed, and industry observers are now turning their attention to the House of Representatives. However, there will be politics around the bill that are unrelated to cryptocurrency, just as there will be in the Senate.

Taking it apart

A huge tax authority clause concerning crypto was placed in a much-more-massive must-pass infrastructure package, which sounded a little strange. Despite unexpected bipartisan resistance to the clause, the bill is already on its path to becoming law (I mean from both crypto advocates and some of the more skeptical voices in this industry). This measure, on the other hand, may face a similar destiny in the House of Representatives.

We've all heard about what occurred last week, but here's a quick recap: Despite a week-long campaign to alter a dubious crypto tax provision in the Senate's $1 trillion infrastructure plan (of which $550 billion is new expenditure), the original form of the wording, which aims to generate $28 billion over ten years, was approved. The House of Representatives stated on Tuesday that it would return from its Augustvacation on August 23 to debate the bill.

Congress' inclusion of cryptocurrency in its infrastructure package indicates that legislators believe the sector is stable enough to survive. However, much of what happens with this law will be influenced by politics outside of the cryptosphere.

The Democratic Party presently has a razor-thin majority in the House of Representatives (220-212). That implies that if any Democrats vote against the measure or opt not to vote, the Republican side would have to make up the difference with votes, but nobody knows how many Republicans would vote for it.

However, there is significant disagreement among Democrats over whether or not to vote for the infrastructure package. Progressive Democrats have threatened to vote against the bipartisan infrastructure plan unless the Senate approves a far bigger $3.5 trillion package, which is unlikely to happen until the fall.

However, a (smaller) group of more moderate Democrats has threatened to vote no on the bigger package unless the House first approves the smaller, bipartisan measure.

After the House returns next week, I'm sure we'll have a better idea of how this bill will go forward, but for now, it's uncertain if the bill will pass at all, much alone with changes to address industry concerns over the crypto component.

Other pressing concerns may take priority over the infrastructure bill discussions. The impending humanitarian catastrophe may be a top concern for House members as they respond to the US military's departure from Afghanistan.

To be sure, there is bipartisan resistance to the bill's present wording on the crypto tax provision. That is undeniable. Rep. Anna Eshoo (D-Calif.), a powerful Democratic lawmaker who represents parts of Silicon Valley, recently wrote an open letter to House Speaker Nancy Pelosi (D-Calif.), urging her to support an amendment proposed by Senators Pat Toomey (R-Pa.) and Cynthia Lummis (R-Wyo.) and backed by Rob Portman (R-Ohio), Mark Warner (D-Va.), and Kyrsten Sinema (D- (D-Ariz.).

Reps. Patrick McHenry (R-North Carolina), Bill Foster (D-Ill.), Ted Budd (R-North Carolina), Ro Khanna (D-Calif.), Tom Emmer (R-Minn.), and Darren Soto (D-Fla.) have all expressed support for altering the wording.

However, I'm not sure whether this level of support will be sufficient for Congress to alter the wording. In the Senate, we saw the same kind of support. After Sen. Richard Shelby (R-Ala.) attempted to attach his own military spending amendment to the Toomey-Lummis-Portman-Warner-Sinema effort, it didn't matter much.

“The body is refusing to take up an amendment that has broad bipartisan support and that we all know fixes something that desperately needs to be fixed because there is a difference of opinion on whether or not the Senator from Alabama should get a vote on his amendment because there is a difference of opinion on whether or not the Senator from Alabama should get a vote on his amendment because there is a difference of opinion on whether or not the Senator from Alabama should get a vote on his amendment. After his effort for unanimous agreement failed, Toomey stated in floor comments, "This isn't a whim of the Senator from Pennsylvania - there is nobody who denies that there is an issue here."

Nonetheless, the bill will be debated in the House, which may contain changes. It's unclear if any changes will be considered at this time, but it's worth keeping a watch on it. As we come closer to the House's return, we'll speak more about it.

The reign of Biden

The guard is changing.

Last week, Bloombergreported that President Joe Biden is contemplating selecting Acting CFTC Chair Rostin Behnam to lead the federal commodities regulator for a full term.