The Senate was presented with two completely opposite amendments. Biden supported one specific proof of stake. The Biden Administration endorsed a tax amendment that appears to be directed at the Defi industry.
The Biden Administration unexpectedly endorsed a Senate amendment that would subject a large segment of the crypto industry to onerous or impossible tax reporting requirements. It would exempt only validators and developers who worked on proof-of-work networks from tax reporting, effectively favoring Bitcoin over networks that use proof-of-stake (PoS) and other consensus mechanisms.
Sen. Lummis said a vote on the crypto amendments, originally scheduled for Thursday night, will now likely take place on Saturday. While the delay allows the crypto industry to mobilize against the Portman amendment, the White House’s endorsement of Biden makes it more difficult to defeat. An earlier amendment, proposed by Senators Ron Wyden (D-OR), Pat Toomey (R-PA), and Cynthia Lummis (R-WY), appeared on the verge of passage but was defeated by the Biden Administration. So, for example, Toomey’s proposal exempted a large group of crypto miners and developers from reporting their customers’ tax obligations. This tweet contains both proposed amendments.
Many projects in the decentralized finance (Defi) space do not, and often cannot, identify their customers, so making them subject to tax reporting could force them to shut down or leave the US. Some suggested the Portman plan is an “attack on Defi,” while Wyden says it would harm the climate and innovation by favoring the most energy-intensive crypto segments.
Crypto opponents in the US government, according to Messari founder Ryan Selkis, have a more cynical plan. Specifically, he asserted that their goal is to cripple the industry by prohibiting PoS networks (such as Ethereum) on compliance grounds, and then to attack Bitcoin via environmental policy:
As the debate over the crypto amendment nears its conclusion on Saturday, prominent members of the cryptocurrency industry have already begun issuing statements warning of the dire consequences of passing the Portman-Warner plan. Among them is venture capital firm Andreessen Horowitz, which has made significant investments in the cryptocurrency industry:
“If the last-minute amendment to the Infrastructure Bill introduced by Senator Warner passes, it will be a stunning loss for America and our ability to remain the innovation epicenter of the world. The proposed amendment recklessly imposes an unworkable reporting requirement on the shoulders of software developers and proof-of-stake blockchain validators,”
the firm in a statement
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