The White House has come out in support of an amendment to the infrastructure bill drafted by U.S. senators Mark R. Warner and Rob Portman — much to the despair of many in the digital asset space.
Initial hopes for the $1 trillion bill, which is over 2,000 pages strong, to be passed by Thursday have been crushed as a number of matters remain unsolved, one of them being its section about stricter reporting standards for the cryptocurrency sector. Following vocal backlash against the first iteration of the draft, the infrastructure bill has already seen an amendment: many had criticized the proposed definition of brokers as too vague and pointed out that if passed as is, it could potentially be interpreted to include developers and bitcoin miners, which could have wide-reaching consequences for the growth opportunities of the digital asset space in the U.S.
Yet the updated version did not satisfy lobbying groups, who argued it was still too vague. Senators Ron Wyden and Cynthia Lummis have since submitted a proposal for another amendment that would explicitly exclude certain groups from the bill's definition of a broker. The amendment highlights participants "validating distributed ledger transactions" as well as those "selling hardware or software for which the sole function is to permit a person to control private keys which are used for accessing digital assets on a distributed ledger." It also includes those "developing digital assets or their corresponding protocols for use by other persons, provided that such other persons are not customers of the person developing such assets or protocols" among the parties to be excluded from the definition of and the resulting reporting obligations of a broker.
Treasury Secretary Janet Yellen, an outspoken critic of Bitcoin and other cryptocurrencies, however, appeared unhappy with the proposal. As The Washington Post reports on Friday, Yellen allegedly spoke with lawmakers on Thursday to "raise objections to the effort led by Senate Finance Chairman Ron Wyden (D-Ore.) and two Republican senators to weaken the legislation’s proposed cryptocurrency reforms."
Senators Warner and Portman on Thursday presented yet another amendment in what appeared like an attempt to find a middle ground; the amendment takes a few steps back from Wyden's and Lummis's proposal. Notably, it seeks to exclude those "validating distributed ledger transactions through proof of work" from the updated reporting structure. The mention of Proof-of-Work, the algorithm used by Bitcoin, now has the wider cryptocurrency space worried as it seemingly intentionally fails to mention currencies that use other algorithms such as Proof-of-Stake.
“We are grateful to Chairman Wyden for his leadership in pushing the Senate to address this issue. However, we believe that the alternative amendment put forward by Senators Warner, Portman, and Sinema strikes the right balance and makes an important step forward in promoting tax compliance,” a White House spokesperson reportedly told The Washington Post.
Notably, the Warner-Portman amendment includes factual error — bitcoin miners don't validate transactions, nodes do.
Yellen is a vocal Bitcoin critic; in February, she spoke of Bitcoin as being "extremely inefficient" as a means of transaction and voiced her concerns over Bitcoin's alleged use for "illicit finance."