Despite Losing Crypto Tax Fight, Industry Made D.C. Take Notice
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Despite Losing Crypto Tax Fight, Industry Made D.C. Take Notice

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1 year ago

A Senate vote to close debate on the $1 trillion infrastructure bill appears to have left “unworkable” provisions in place — but crypto lobbying is suddenly being taken very seriously.

Despite Losing Crypto Tax Fight, Industry Made D.C. Take Notice

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Sometimes you can win by losing. That seems to be the outcome of the crypto industry’s apparently failed fight to force changes to the $1 trillion Senate infrastructure bill’s tax provisions it considers “unworkable.”

Even so, Politico judged that the outcome is “Washington wakes up to crypto influence amid infrastructure fight,” adding that the “industry was caught off guard when the Senate targeted it with new tax rules. But it fought back with a vengeance.”
The New York Times’ Aug. 9 coverage of the legislation also made that point somewhat indirectly. It said, “rank-and-file lawmakers spent hours haggling over a pair of dueling amendments that would adjust who would be subject to increased tax scrutiny on cryptocurrency, among other outstanding proposals.”

None of those other proposals rated a mention in the article.

While it’s not a dead certainty, the Senate’s inability to vote on either of the dueling amendments to the omnibus bill’s cryptocurrency provisions makes it unlikely they will be changed before the final vote on the bill is held sometimes early Tuesday morning. 

The crypto industry was caught flat footed by the legislation, which would raise $28 billion in taxes with a number of proposals, including forcing all “non-custodial” brokers to collect tax information on clients — even permissionless DeFi-based decentralized exchanges (DEX) and peer-to-peer lending markets that simply cannot do it.

Fight Another Day

While Compound Labs’ general counsel, Jake Chervinsky, noted that the bill could be amended by a voice vote, that would require unanimous consent, which is unlikely. It could come up when the House and Senate work out the differences in their versions of the bills in conference.

Still, Politico said the intensity of the fight “has revealed a new power player in Washington that’s starting to find its footing: the cryptocurrency lobby.”

Fighting back “with a vengeance” the industry was able to bring in trade groups, hire lobbying and public relations firms, and make the fight a Twitter event, the article added. 

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