Washington wakes up to crypto influence amid infrastructure fight
The industry was caught off guard when the Senate targeted it with new tax rules. But it fought back with a vengeance.
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.
The industry was first caught off guard when lawmakers and the Biden administration targeted it with new tax rules tucked into the bipartisan Senate infrastructure bill announced last month. But it fought back with a vengeance, showing that startup digital trading platforms and other firms could rally a small army of recently requisitioned trade associations, lobbyists and public relations experts to put up a real defense. Still, they failed to secure changes as of Sunday night.
The top Democrat on the Senate Finance Committee, Ron Wyden of Oregon, took on the White House to shield virtual currency players, as did the top Republican on the Senate Banking Committee, Pat Toomey of Pennsylvania.
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. Jack Dorsey, the top executive of financial payments company Square, called on his 5.6 million Twitter followers to fight bill language that he called “unworkable.” Even Kiss bassist Gene Simmons was involved, announcing in a tweet that he supported an amendment to protect the industry.
“This has definitely been a wake-up call to crypto,” said Kristin Smith, executive director of the Blockchain Association, an industry lobbying group. “But on the flip side, I think Washington is starting to see that crypto is more of a force than anybody ever anticipated.”
The episode, by no means over as the Senate prepared to send the legislation to the House, revealed the increasing influence of digital currency startups that in just a few short years became multibillion-dollar firms as investors flocked to Bitcoin and other digital assets. Their rise is reflected in their Washington operations, which were once dominated by idealists and academics but now employ former elected officials and other seasoned government operators.
At issue in the lobbying battle was a proposal included in the infrastructure bill that would require cryptocurrency trading platforms and other entities defined as “brokers” to report digital asset transactions to the Internal Revenue Service. Lawmakers and the Biden administration included the provision as part of a bid to raise revenue for infrastructure projects — about $28 billion, according to an initial estimate — and also address long-running concerns that cryptocurrency traders don’t pay the taxes they should.