How Crypto Became a Major Story in the U.S. Infrastructure Bill
A signature legislative accomplishment.
Every American administration has one or a few of those. They set down legacies and can make a difference for generations to come.
The Biden administration may have laid down its marker with the Infrastructure Investment and Jobs Act that sailed through the senate in August with a surprisingly bipartisan vote. This legislation will pour over $1 trillion into various infrastructural projects in America over the next few years. That alone should be a headline story for weeks.
Yet, something else took some of the limelight.
Crypto was a significant topic of discussion during deliberations over this Act. Yes, the “fringe” industry was a contentious topic in the world’s most powerful legislative chambers.
Cryptocurrency Tax Reform
The infrastructure bill is massive, covering several aspects of the economy. The actual contention for cryptocurrencies during deliberations came from the idea of tax rules for crypto. This clash, to some, was a political come-of-age moment for cryptocurrencies like Bitcoin.
Think back to a dozen years ago if you want to know why such events are so historic. So much has changed and today, Bitcoin and crypto is a legitimate topic of discussion in the halls of the U.S. Congress.
There are many factions within crypto itself. However, this moment served as an unusual galvanizing moment for investors, traders, and thinkers in this community.
This moment was like lightning in a bottle with Ashton Kutcher, Elon Musk, and even Jack Dorsey taking part. They turned up the heat on Twitter.
Senators deliberated on whether to strengthen tax enforcement on crypto transactions. Texas Senator Ted Cruz was one of the leading opponents of this move. He cited the need not to regulate this sector further in a Bill that was supposedly for infrastructure.
Cruz stated that there were just five senators in Congress with a decent understanding of how crypto works. Some had proposed more taxes on crypto and better regulation on this industry.
Inside the Events As They Unfolded
President Biden and the Republicans reached a compromise on how to pay for the Infrastructure Bill. The Republicans did not want their tax cuts repealed, and this administration tried to find new ways to fund them.
Drafters proposed a clause that would vastly increase the scope of who a crypto broker was. Crypto-friendly senators like Pat Toomey and Cynthia Lummis proposed to amend this clause to make it more tenable for the crypto industry.
What followed was another amendment that further added to the controversy. The Senate then held up voting for the bill as senators tried to grapple with the emergent complex industry. Well, it may not be complex to you, but for a Senate full of senior citizens who have hardly debated this new innovation, it would take a while.
Senator Richard Shelby then came in with a different proposal related to the bill’s defense spending aspects. The push and pull failed both amendments. Therefore, the original bill passed without these amendments, and the cryptocurrency industry lost a chance to have some legislative clarity.
This bill will require crypto brokers to report customer information on transactions to the IRS. The problem is whether miners, stakers, and software developers who simply don’t have customers, will have to comply with this requirement. It all comes down to how the IRS will interpret this provision.
Broker-dealers, prime brokers, asset managers, and exchanges already know of their disclosure requirements. The entities have anti-money laundering obligations that they must uphold. However, the question is whether other services within crypto will also have to follow suit.
All Publicity Is Good Publicity
Cryptocurrency holders may have been facing uncertainty with the proposal.
However, those who trade it could care less. Bitcoin was getting publicity on arguably the highest platform available. That, in itself, was a significant triumph.
This proposal was a home run for Bitcoin. It marked the first time it had been a focus of the national legislative agenda.
Ultimately, the amendment failed. Senators disagreed on a compromise for including crypto tax reform in the legislation. Instead, Congress will proceed to pass the other legislation.
However, the seeds have already been sown. Bitcoin will undoubtedly come up again in national legislation. When this amendment was up for debate, lobbyists and executives of crypto companies were behind the scenes coordinating with congressional outreach efforts.
The events in Washington did not completely go to waste. These efforts fit into a trend for the burgeoning crypto industry. This sector has been a story of short-term setbacks followed by longer-term gains. Therefore, that has been true for prices and will eventually shape out in legislation.
Tax reporting proposals hint that Washington may finally accept Bitcoin as a permanent part of the financial ecosystem. Crypto is now big enough to warrant government attention. Additionally, it may be a final indication that Washington will no longer try and kill Bitcoin.
That realization is what many Bitcoin enthusiasts choose to highlight. It has a seat on the high table, and that is unlikely to change. That seemed far from possible just five years ago. Today, enough senators know about cryptocurrency to try and make the government revenue from this industry.
Bitcoin and Cryptocurrency Getting More Mainstream
You can lose a battle and still win the war.
That seems to be the overwhelming consensus from the crypto community about this course of events. Developing a policy on digital assets is not going to be easy. This sector is still shifting rapidly to accommodate innovation.
The failure by Congress to make meaningful progress should not be regarded as a failure. Instead, it is a learning moment for all stakeholders on the dynamism of this industry. There are many interconnected elements and regulations that should take this diversity into account rather than create a general overbearing policy.
Therefore, it could become a pivotal moment in the rise of Bitcoin. There is tremendous potential for building supply chains, finance, and for the government to collect revenue without stifling the industry.
The infrastructure Bill was the first of many. This debate will continue to heat up as crypto grows more prominent and more legislators learn about the potential therein.
VBit Mining Is a Stakeholder in This Journey
Some are only beginning to understand the Bitcoin train.
It may stutter and even look like it’s fledgling. However, its overall momentum is unstoppable. The more it breaks new ground, the higher its profile gets. There has never been a similar innovation in the illustrious history of humanity.
The U.S. Congress is now discussing crypto. This moment is not a drill. Many naysayers thought that if Bitcoin got too big, the government would try and kill it. Instead, they are now also trying to have a piece of the pie.
VBit Mining shares this vision. This potential is why we have dedicated resources and expertise to mining Bitcoin since 2018. It is a way to tap this asset at the source. What’s even more impressive is that all that work gets done by computers.
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