The U.S. Congress has a packed agenda this week. There are three key pieces of legislation that they are planning to tackle:
- A $1.5 trillion infrastructure bill that includes some language regarding the definition of crypto “brokers” that could impact cryptocurrency markets;
- An additional $3.5 trillion dollar spending bill that will expand spending on social welfare programs and climate change initiatives;
- As well as a measure to raise the debt ceiling to allow the U.S. government to continue to borrow more money to pay past debts.
The first legislative project listed above has been getting a lot of attention within the cryptocurrency space because it contains the first bit of U.S. crypto regulation with bite. The bill contains a broad definition for crypto “brokers” – whom are likely to be primary targets for taxation to help fund the infrastructure bill.
Under the current vague language, an argument could be made that “brokers” could include individual crypto miners and software developers, in addition to crypto exchanges.
Conventional wisdom holds that if the current language is approved into law, it could have a chilling effect on the entire cryptocurrency industry. However, there are some important things to keep in mind even if this current legislative bill gets signed into law.
As it stands now, the U.S. Treasury Department would be the primary agency that would interpret the law if passed. It’s been reported that the Treasury intends to “…provide clarifying guidance after the bill is passed to provide exemptions to firms that do not actually operate as brokers.” Those reports should help ease some of the FUD within the crypto-space surrounding this proposal.
Several media outlets have also reported that Treasury Secretary Janet Yellen opposed amendments to the bill in an effort to intentionally keep the “broker” definition vague to give her agency greater flexibility to interpret the pending law.
Additionally, the House of Representatives approved a critical defense spending bill last week that already contains a framework to more thoughtfully consider a regulatory outline for cryptocurrencies within the US.
On Thursday, Coindesk reported that a key crypto provision was included in the must-pass, bipartisan defense spending bill called The National Defense Authorization Act. The proposed language would require clarity as to whether the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) should have final oversight regarding various sectors of the crypto marketplace.
While the Senate still needs to pass its own version of the defense bill, it has wide support from both Republicans and Democrats. It’s expected to pass easily through both houses and then through the entire Congress.
Once approved, the crypto language in the defense bill, which was inserted by Rep. Patrick McHenry (R-N.C.), could supersede the vague crypto language in the infrastructure bill because the defense provision would require establishing where the crypto sphere of control lies by law.
Furthermore, the defense provision would mandate a more thorough review of the cryptocurrency regulatory needs by creating a working group within 90 days of the bill’s passage. The working group would be composed of SEC and CFTC representatives, as well as non-governmental individuals from small businesses and the financial tech sector.
It’s worth noting that even though the $1.5 trillion infrastructure bill cannot have new amendments added at this point, it can have language removed. It’s not impossible to see the crypto language removed from the House version of the infrastructure bill at the last minute, on the grounds that last week’s defense bill already contains a path forward for crypto regulation.
Finally, a Washington, D.C. policy expert – speaking on condition of anonymity with DailyCoin – says it’s not guaranteed that either the $1.5 trillion infrastructure plan or $3.5 trillion social programs bill will pass the Senate in their current versions.
“The Speaker [Nancy Pelosi] announced last night that the House will vote on the bipartisan infrastructure package on Thursday. That may satisfy the 8-10 moderate Democrats who were demanding a vote on the infrastructure before reconciliation. This does not mean, however, that either package will pass the Senate.”
Given all these legislative wrinkles that need to be ironed out, it should be an interesting week to say the least.
On The Flipside
- Even though Democrats control both houses of Congress, there is a lot of division within that party.
- If they can’t secure every Democratic vote, one or both of these provisions could fail
- That would be a major setback for the Biden administration and the Democratic agenda to advance any significant legislation before next year’s midterm election.
Why You Should Care?
This week could mark a flashpoint for the future of cryptocurrency regulation within the largest economy in the world.