Following days of squabbling and frantic tweeting, cryptocurrency lovers, activists, and entrepreneurs watched in dread on August 10 as the US Senate adopted a $1 trillion infrastructure plan, complete with an article that many fear could irreversibly damage the entire American crypto sector. The contentious rule would require “brokers” of digital asset transactions—i.e., cryptocurrencies—to notify their consumers to the IRS so that they might be taxed. The crypto community complained that the bill’s definition of “broker” was so broad that it might include miners, validators, and creators of decentralized applications, all of whom, despite playing critical roles in the blockchain ecosystem, have no method of identifying their anonymous users.
Initially, it appeared that the bill’s language might be changed to exempt those groups after a trio of senators proposed an amendment clarifying the phrase “broker.” Then came a White House-backed amendment, which sought a more lenient clarification, exempting proof-of-work miners—which use an energy-intensive process to secure blockchains like Bitcoin or Ethereum—but not many other categories, such as proof-of-stake validators, which perform the same function without burning energy. The Senate voted to pass the bill as-is, just as a compromise stance was being hammered out. On the surface, it appears that American crypto has taken a beating. However, the story that has been going around is entirely different: The infrastructure bill marks a turning point in bitcoin history. The technology, which is essentially a crypto-anarchist, anti-bank, and borderline anti-government manifesto disguised as code, has finally gotten a lobby. The fact that some senators are willing to battle for cryptocurrencies shows that it is more than a collection of Twitter accounts and a few blue-sky venture capitalists. Whatever the reason, it wields power, and following the saga over the infrastructure bill, it will be able to wield it even more deftly
Alex Brammer, vice president of business development at Luxor Tech, a bitcoin mining company, says, “We’re seeing the formalization, the maturation, of the crypto lobby, and this was the first organized effort that brought that to bear.” “Organizations like the Blockchain Association, the Texas Blockchain Council, and the Chamber of Digital Commerce will undoubtedly continue their efforts.”
Cryptocurrency is sometimes referred to as the Wild West, yet established businesses in the sector—from large mining operations to Wall Street-listed behemoths like Coinbase—tend to want regulation to define the bounds of what is permissible and what might get them into trouble. “Intelligent regulation is welcomed by sophisticated participants in this space. For large organisations, it delivers clarity and predictability,” Brammer explains. “It establishes a set of road rules that allow large, publicly traded corporations to ensure that they are doing everything possible to be viable and profitable in the future.”
But what about the lesser, less well-known, and less corporate players? Since 2009, Bitcoin, an asset held and lionized by billionaires like Mark Cuban and Elon Musk, has grown into an industry with heft and brand awareness.
Will the Big Crypto lobby devote time and resources to defending the DeFi sector? On the one hand, it is unnecessary. “I don’t think anything changes because bitcoin is already well established as a commodity under US law,” Carlasare explains. On the other hand, Murck believes that it may be in its best interests to continue preserving the larger environment. “You want to make sure that it’s truly a community effort, not just an industrial effort to fully institutionalize,” he says. “You don’t want regulation to drive a wedge between those groups,” says the author.
