Proof-of-stake Coins In Danger as US Infrastructure Bill Chaos Intensifies
Mayhem appears to have broken loose in the world of American politics, and the crypto community may be caught in the eye of the storm, as now, proof-of-stake (PoS) networks might be left in danger at a time when Ethereum (ETH) is moving towards PoS.
A controversial infrastructure bill being moved with alacrity through the parliamentary system contains a number of clauses that pertain to crypto players and how they are taxed. As previously reported, most of these pertain to the legal definition of a “broker.” This week, the American crypto community has attempted to drive up support for a bipartisan amendment to the bill put forward by three senators, including the crypto-keen Cynthia Lummis.
The original bill could force the crypto mining and trading community to cough up a staggering USD 28 billion – to help fund hundreds of billions worth of USD worth of public spending projects. “Broker” status would force miners and developers to provide exhaustive lists of documents and transaction history records to Internal Revenue Service officials – before paying taxes on their holdings and historic earnings.
Lummis, along with the Senate Finance Committee Chairman Ron Wyden and the Republican Senators Pat Toomey, proposed an amendment that would exempt miners, validators, blockchain developers and wallet-making developers from being classed as “brokers” – and thus subject to all of the provisions of the bill.
But now a fresh spanner has been thrown into the works – in the shape of a brand new, rival amendment that appears to have backing from the Presidential office.
The amendment was launched by senators Rob Portman, Mark Warner and Kyrsten Sinema. Confusingly, perhaps, this new amendment proposed the same for of exemption as the original amendment – but only for proof-of-work miners, such as Bitcoin (BTC), and (for now), ETH miners. That means developers and validators on proof-of-stake networks like and Cardano (ADA) (or yet-to-be-launched Ethereum 2.0) would be classed as brokers – while Bitcoin protocol professionals would effectively escape unscathed.
Some were quick to point out that in some respects at least, there appeared to be very little difference if at all between at least certain parts of the latest amendment proposal.
Comparisons between two amendments to infrastructure bill #Bitcoin https://t.co/VIykpehEOB— Joe Carlasare (@JoeCarlasare)
And it looks as though the new amendment may have some powerful backers. The White House producer Pat Ward tweeted a statement from Andrew Bates, the White House Deputy Press Secretary, which read:
“The Administration is pleased with the progress that has yielded a compromise sponsored by Senators Warner, Portman and Sinema to advance the bipartisan infrastructure package and clarify the measure to reduce tax evasion in the cryptocurrency market. The Administration believes this provision will strengthen tax compliance in this emerging area of finance and ensure that high-income taxpayers are contributing what they owe under the law.”
The Washington Post economics reporter Jeff Stein confirmed that the White House “is coming out formally in support of the Warner-Portman-Sinema crypto amendment,” and “implicitly against the Toomey-Wyden-Lummis plan.”
And the original amendment appears not to be faring pretty badly thus far, with a key debate coming up in the Senate tomorrow.
“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.”
Lummis issued a desperate plea, writing:
“We NEED you. Please call your senators. Please tweet. Please email. We are facing major headwinds on the Wyden-Lummis-Toomey amendment. Burying financial innovation in red tape and sending [developers] and miners on info collection wild goose chases for info they don’t know is horrible policy.”
Wyden, meanwhile, took aim at the rival amendment, noting:
“The Warner-Portman-Sinema amendment provides a government-sanctioned safe harbor for the most climate-damaging form of crypto tech, called proof-of-work. It would be a mistake for the climate and for innovation to advance this amendment.”
Jerry Brito of Coin Center, a key advocate for the Wyden-Lummis-Toomey amendment, called the Warner-Portman-Sinema measure “disastrous” as “it only excludes proof-of-work mining” and “does nothing for software [developers].” If the rival amendment passes, he added “this is the US Congress picking winners and losers.” His sentiments were echoed by Senator Toomey.
The legal expert Sarah Shtylman, Counsel at Perkins Coie, opined that the Warner-Portman-Sinema amendment “demonstrates either blatant favoritism or a deep misunderstanding of the tech at issue.” ____
@bitcoinmom No chance Brook. Bitcoin was designed for this while shitcoins have been using buzzwords to scam the g… https://t.co/80WLawwQfD— Mr.Hodl 🌕🍿 (@MrHodl)
@parkeralewis @SenTedCruz If only politics made so much sense.— Lyle Pratt (@lylepratt)
politics in 2021 is the senate and the white house bickering over the relative merits of blockchain consensus mecha… https://t.co/WhEFeGFj8G— nic carter (@nic__carter)
Best part of this Washington deal is the boomers pretending to figure out how to pay for all the stuff.— Travis Kling (@Travis_Kling)
@BTCization imagine asking a bank for permission to access your own money— Mike Alfred (@mikealfred)
i am now a single issue voter— Meltem Demir◎rs (@Melt_Dem)
One interesting aspect of the crypto regulation battle is that it isn’t divided along partisan lines.— Zach Weissmueller (@TheAbridgedZach)
This is not to say a good regulatory regime isn’t important. Obviously it is. And @coincenter and friends are doing… https://t.co/Jj9IJcBx1G— Ethan Buchman (@buchmanster)
@CaitlinLong_ The Warner-Portman amendment is there to fool you into supporting the Wyden-Lumis-Toomey amendment, a… https://t.co/dn5jYctaXn— BigSkyTraveller (@RationalMT)
@hasufl I mean they have lots of political capital so yeah it affects how legislators think about their vote— Zack Voell (@zackvoell)
@jchervinsky @iamDCinvestor @econoar Imo the alternative (and far less desireable) amendment, and then the Whitehou… https://t.co/ikjCiITGfZ— S/car/ous (@Sicarious_)
We all need to realize this is going to be commonplace for crypto and defi the next 20 years when it comes to regul… https://t.co/4yqS2ZFhhf— eric.eth (@econoar)