The United States plans to move forward with passing its original infrastructure bill before the end of next month, putting its lead in the cryptocurrency industry at risk.
Several crypto industry experts, pro-crypto senators and congressmen have warned the United States government about the potential risk that exists for the cryptocurrency industry if the infrastructure bill is passed in its original form. The risks, as many have expressed, could cause the North American nation to lose its global technological leadership compared to other powers such as China, in addition to significantly hindering its progress in the innovation that cryptocurrencies and digital assets are creating globally.
According to data of the Cambridge Bitcoin Electricity Consumption Index (CBECI), the Bitcoin energy consumption index created by the University of Cambridge, el hash rate de Bitcoin in the United States it has grown 400% in the last year; a value that, instead of increasing, could decline significantly if the aforementioned law is approved. The reason behind these risks and concerns is the strict regulatory requirements, KYC registration and tax obligations, which the government wants to impose on all crypto industry participants in the country, through the bill.
Senator Rob Portman and those who prepared the regulatory proposal, still to be approved in the United States House of Representatives, aspire collect about $28.000 billion in taxes from the cryptocurrency industry, for a decade starting in 2023. However, the infrastructure bill does not only include cryptocurrency companies, custodians and service providers, but possibly also non-custodial entities participating within this industry; such as miners, node validators and software developers. If so, the United States would be expelling financial and technological innovation from its territory and “unconsciously” favoring other nations, according to several pro-crypto experts and politicians.
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Concerns about the infrastructure law
Since Senator Portman introduced the infrastructure bill, The crypto community and its supporters have not stopped the debate with regulators, citing the possible risks and consequences that the law will bring to the crypto industry..
Jerry Brito, CEO of CoinCenter; Kristin Smith, CEO of Blockchain Association; Jack Dorsey, CEO of Twitter and Square; Elon Musk, CEO of Tesla and SpaceX; Michael saylor, CEO of MicroStrategy and Brian armstrong, CEO of Coinbase, are some of the leaders of the crypto community in the United States who have spoken out against the passage of the original infrastructure bill, which does not take into account the opinion of stakeholders.
Cynthia lummis, a United States senator from the States of Wyoming and a well-known pro-crypto politician, said a few weeks ago that the country was making important decisions behind closed doors. Lummis was referring to the Senate's approval of the bill without considering any of the proposed amendments to the bill presented by her and other US senators.
“There are some important lessons from this about the antics in Washington. First: this is what happens when bills are drafted behind closed doors without the participation of experts and stakeholders.said the senator, while highlighting the need to educate about crypto and innovation in US politics.
Rejected amendments
Lummis presented, together with Senators Ron Wyden and Pat Toomey, a proposed amendment to the infrastructure law to limit the terms and definitions of “broker” or “corridor” introduced by the law. The broadness of these terms hints that miners, node validators, and software developers would be required by law to file reports and file taxes. Therefore, the amendment de Lummis sought to clarify and narrow the definitions to explicitly exclude them, citing that they were non-custodial entities.
Senators Rob Portman, Mark Warner and Krysten Sinema also presented an amendment proposal that contrasted with Lummis's. Crypto community leaders spoke out against this second amendment. If passed, Portman's amendment would pick “winners and losers” in the crypto industry by favoring proof-of-work protocol miners (PoW) and exclude them from taxes, and condemn the validators of the proof-of-stake protocol (PoS) and oblige them to file tax returns. Portman, who introduced the original infrastructure bill, acknowledged that he could better work the document to clarify the terms and definitions of “corridor.”
After numerous reactions from the crypto community, Senators Warner, Portman and Sinema adjusted the proposal so as not to affect validators, although protection for developers remained uncertain in said amendment. However, when the Senate voted on the infrastructure bill, it did so on the original bill, without taking into account any of the amendments presented to protect crypto industry innovation.
After approval, the senators reached an agreement and unified their proposals into a single amendment to generate debate and make themselves heard.
“Before September 27”
Now, after approval by the Senate, the infrastructure bill is being debated in the United States House of Representatives, and as reported its president Nancy Pelosi, the proposal will be voted on for approval before September 27.
Lummis and the other senators hope that the latest amendment, which limits the broad definition of “broker” and protects non-custodial entities of cryptocurrencies, will be considered in the House of Representatives so as not to affect innovation and financial development in the country .
On the other hand, for the CEO of the Blockchain Association, Kristin Smith, the approval of the original bill could cause the expulsion of miners and other participants in the crypto industry from the country, affecting the leadership of the United States within this nascent financial industry and technological.
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