August 9, 2021
What to expect in Washington (August 9)
The Senate August 8 cleared two more hurdles on the Infrastructure Investment and Jobs Act (H.R. 3684) – invoking cloture on the underlying bill after approving the Sinema-Portman substitute amendment – but was unable to agree on the consideration of additional amendments or accelerate a vote on final passage. Aside from the substitute, no amendments have been voted on since Thursday; neither of the competing amendments on cryptocurrency were brought up and may not be before passage. The bill makes investments in roads & bridges, broadband, water and power, paid for mostly with unused COVID funds but also with IRS cryptocurrency reporting, pension smoothing and a delay of the Medicare rebate rule.
Senator Bill Hagerty (R-TN) has objected to expediting consideration of the bill since Thursday night, and Politico credited that situation with “dampening the Democratic majority’s enthusiasm for allowing the GOP to have more amendment votes.” In the context of the cryptocurrency issue possibly not being further addressed by amendment, Bloomberg Tax reported Senator Mitt Romney (R-UT) as saying, “The power of individual senators to block votes is quite substantial.” Absent a deal to accelerate the process, final passage of the bill may not occur until late Monday or early Tuesday.
Late August 8, Senate Majority Leader Chuck Schumer (D-NY) said amendments are no longer in order and the chamber will move forward to wrap up the process as soon as possible before moving to the FY2022 budget resolution with reconciliation instructions. “The two-track process is moving along,” he said. The Senate is back in at noon on August 9.
Washington Post reporter Paul Kane tweeted late August 8 that an emerging deal would allow for Monday floor speeches on the infrastructure bill and a final vote Tuesday morning, followed by debate and a vote-a-rama on the FY2022 budget reconciliation. Senate Budget Committee Chairman Bernie Sanders (I-VT) released the resolution this morning, which will allow development of a trillions-of-dollars package of Democratic priorities that can pass with a simple majority vote in the Senate. The budget is available here.
Congress is also under pressure to address the federal debt limit reinstated on August 1.
Cryptocurrency – Without a cryptocurrency amendment, clarifications regarding the provision could be negotiated with the House or, if enacted in its current form, addressed in Treasury regulations. More generally, it is unclear how soon the House will act on the bill given Speaker Nancy Pelosi's (D-CA) commitment to take up infrastructure only after the Senate passes a reconciliation bill under the FY2022 budget resolution. Key members said they remained interested in clarifying their intent on cryptocurrency.
During an August 8 speech, Senator Rob Portman (R-OH) said: “The concern has been expressed that some in the cryptocurrency industry who are not brokers could be inadvertently caught up in this definition. The Treasury Department, the nonpartisan congressional Joint Committee on Taxation and others believe that the current language is clear and that the reporting requirements only covers brokers, but my view is that we should work to clarify this given the potential for confusion on an extremely important issue. In particular, we want to be sure miners and stakers and others now or in the future who play a key role by validating transactions [where] sellers of hardware or software for digital wallets or note operators or others who are not brokers are clearly exempted. Well, it’s not the intent of the underlying bill to include them, I believe we can do more to make this clear, which is why I will continue to work with colleagues to clarify the intent of the information reporting language.”
Senate Finance Committee Chairman Ron Wyden (D-OR) has said the cryptocurrency amendment he authored with Senator Pat Toomey (R-PA) “makes clear that reporting does not apply to individuals developing blockchain technology and wallets.”
An August 8 Washington Post story said the Wyden amendment “would specifically exempt cryptocurrency miners and software developers from new tax reporting obligations that they say would prove impossible technically to meet. Cryptocurrencies depend on ‘miners,’ individuals and firms who through complex computing processes produce digital coins, such as bitcoin. The Biden administration has maintained it has no intention to impose the reporting requirements on miners but expressed concern that including broad exemptions could provide a loophole exploited by the industry to avoid tax compliance. In an effort to find a middle ground, the administration and Sens. [Portman] and Mark R. Warner (D-Va.) proposed exempting only one category of cryptocurrency miners, but under intense industry blowback agreed on Saturday to broaden their proposal to include another substantial category of mining.”
Both the Post and Politico noted that, even with a stalemate on amendments, the prominence of the issue as a persistent sticking point late in consideration of a massive, broad-ranging bill previewed potential further efforts by Congress to address a difficult-to-understand issue with increasing political heft. “An intense infrastructure bill brawl between Bitcoin advocates, Congress and the White House has revealed a new power player in Washington that’s starting to find its footing: the cryptocurrency lobby…” Politico reported. “Unlike Wall Street banks, the industry was able to direct thousands of crypto enthusiasts on social media to join the battle by providing a real-time play-by-play of Senate negotiations.”