Crypto community criticizes new amendment made to Biden's big infrastructure bill

There has been little tension the White House as the Biden administration pushes back against a bipartisan group of senators in a last minute effort to limit changes in the infrastructure bill to increase federal regulation of cryptocurrency. The voting of the bill which was supposed to be concluded on Thursday night was stalled by the intense lobbying, turning out to be a weekend long debate. 

Treasury Secretary Janet Yellen, encouraged lawmakers on Thursday to raise objections to the proposals led by the Senate Finance Committee Chairman Ron Wyden (D-Ore, and two Republican senators. According to sources familiar with the matter, Yelen's aim was to weaken the legislation's proposed cryptocurrency overhauls.

In July, Sen Rob Portman (R-Ohio) and the White House agreed to a proposal that required increased tax compliance for cryptocurrency brokers in order to help pay for the bipartisan infrastructure bill. The Biden administration intends to settle the payment of its $28 billion planned infrastructure spending by tightening tax compliance in under regulated cryptocurrencies. That's why the topic of cryptocurrency is appearing in a bill that concerns rebuilding bridges and roads.

Critics of the legislation argue that the bill intends to declare anyone "responsible for and regularly providing any service effectuating transfers of digital assets" to be a broker who is subject to tax reporting requirements. In effect, this may force cryptocurrency developers and companies to start collecting and reporting information on users, a move that is quite difficult to achieve in a decentralized financial system.

The proposal has since come under stringent criticisms by cryptocurrency investors who argue that the move would only give the Biden administration more opportunity to literally cripple the fast growing cryptocurrency field.

The proposal has also been rejected by Wyden, Sen Patrick J. Toomey (R-Pa) and Sen Cynthia M. Lummis (R-Wyo), who are actively pushing an amendment to the infrastructure bill which would prevent the Biden administration from applying new rules to the cryptocurrency ecosystem. 

As the debate between Wyden and the White House intensified on Thursday night, Portman and Sen Mark R. Warner (D-Va.) proposed a competing amendment as a reasonable and potential compromise for both parties. The new proposed amendment would exempt more cryptocurrency actors from greater regulation than the initial proposal, but lesser than what Wyden, Toomey, and Lummis are proposing. 

"We are grateful to Chairman Wyden for his leadership in pushing the Senate to address this issue," said White House spokesperson Andrew Bates, in a statement. "However, we believe that the alternative amendment put forward by Senators Warner, Portman, and Sine a strikes the right balance and makes an important step forward in promoting tax compliance."

The White House said in Thursday that it supports the Portman-Warner proposal, and would do less to limit its new authorities over cryptocurrency.

In a joint letter cryptocurrency companies including Square, Coinbase, Ribbit Capital, and other stakeholders warned of a potential "financial surveillance" and other unintended impacts that the bill could have on cryptocurrency miners and developers. Two privacy-minded digital rights organizations, the Electronic Frontier Foundation and Fight for the Future, also strongly criticized the bill.

"We stand with @Square, @RibbitCapital, @coincenter, and @BlockchainAssn about the digital asset provision in the infrastructure bill. And we applaud @ronWyden @senLummis @ senToomey in proposing a thoughtful amendment to get the tech right," Coinbase said in a Tweet.