Inside the Senate’s sudden cryptocurrency showdown holding up the Biden infrastructure bill

Sens. Ron Wyden and Mark Warner
Democratic Sens. Ron Wyden of Oregon and Mark Warner of Virginia.

  • Two bipartisan Senate gangs are engaged in a last-minute clash over cryptocurrency tax enforcement.
  • The fight is scrambling partisan politics and may provide a glimpse into future crypto regulations.
  • “We’re all working trying to resolve these issues,” Sen. Ron Wyden told Insider.
  • See more stories on Insider’s business page.

It’s a Senate fight causing an unusual cast of characters to team up: Jack Dorsey, head of Twitter, Gene Simmons of the rock band KISS, and Elon Musk of Tesla.

Those three are on the same side in an unexpected clash among senators racing to pass President Joe Biden’s $550 billion infrastructure bill sometime early next week.

Two bipartisan Senate gangs are dueling in a sudden showdown over cryptocurrency tax enforcement in the legislation. It’s a fight that’s scrambled the partisan politics Congress is usually known for and provides a glimpse into how lawmakers may further regulate the burgeoning trillion-dollar industry.

GOP Sens. Pat Toomey of Pennsylvania and Cynthia Lummis of Wyoming, along with Democratic Sen. Ron Wyden of Oregon are partnering on an amendment to exempt cryptocurrency miners, software developers, and protocol developers from tax reporting requirements because they say they’re unable to produce the information to comply. These miners are individuals and companies who generate digital coins.

The crypto overhaul triggered last-minute pushback from the White House, which sought to preserve the Treasury Department’s flexibility to draft new rules. The Biden administration endorsed a rival amendment on Thursday from Democratic Sens. Mark Warner of Virginia and Kyrsten Sinema of Arizona, and GOP Sen. Rob Portman of Ohio. They said it would lead to greater tax compliance.

The measure would exempt a significant number of actors, but not to the extent the Wyden amendment does. There were few immediate signs of progress on Saturday. But talks are ongoing and could be reaching a critical juncture.

“We’re all working trying to resolve these issues,” Wyden said in an interview Saturday evening. “I continue to feel very strongly I want to crack down on tax cheats and people associated with these centralized programs, crypto exchanges.. I just don’t want to destroy the innovation that comes from a decentralized network.”

Toomey, in an interview on Saturday, said “There are constructive conversations going on.” “I certainly hope we’re gonna get to a resolution because the underlying text is badly flawed and needs to be fixed,” he said.

Where lawmakers stand on cryptocurrency taxes

Crypto coins circle
crypto coins circle

Last month, a bipartisan group of senators struck a deal with the Biden administration to include new tax reporting measures on the cryptocurrency industry. It was part of an effort to generate new revenue to finance the infrastructure bill.

But it came under heavy criticism from cryptocurrency investors and advocates who argued it could devastate the industry with onerous information requirements many are simply unable to produce.

“It has language that would allow Treasury to sweep in vast amounts of all kinds of actors and code that are not brokers in the normal understanding of that word,” Jerry Brito, executive director of the cryptopolicy think-tank Coin Center, told Insider. Brokers allow traders to sell and buy cryptocurrencies.

It prompted Wyden, Toomey, and Lummis to unveil their own version. It’s an unusual coalition with a liberal anxious about government overstepping into the tech world and two conservatives wary of burdensome rules on the financial sector.

It also garnered support from a disparate cast of characters, including Tesla CEO Musk, rock star Gene Simmons and Twitter’s Dorsey, who assailed the new crypto rules.

Then Warner, Portman, and Sinema offered their amendment earlier in the week in a bid to strike a compromise. Wyden suggested he was blindsided by the Biden administration coming out in support of it. “I really didn’t know about any of this as chairman of the [Senate] Finance Committee,” Wyden said.

Some experts say the Warner version would limit Treasury’s ability to levy new rules. “My concern is the Wyden amendment would narrow the field too much and leave too much ambiguity and room for litigation,” Jason Furman, former chief economist to President Barack Obama, said in a recent interview. “Treasury needs flexibility not to have its hands tied.”

Some lawmakers were still undecided on which amendment to support. Sen. Bill Cassidy of Louisiana, one of the GOP architects of the infrastructure bill, told Insider on Saturday he was “still looking at them both.”

Others like Republican Sen. Kevin Cramer of South Dakota had made up their minds. “I like the Toomey one,” Cramer told Insider, adding he wanted to “shrink the net” that would be cast on the industry.

Democratic Sen. Jon Ossoff of Georgia jumped into the talks late on Saturday as a possible mediator.

Portman confirmed Ossoff was playing a role in the negotiations on Sunday. “I’ve been working with colleagues Sens. Warner, Wyden, Toomey, Lummis, Ossoff, Sinema on a potential solution I believe will help reassure stakeholders these individuals will not be considered brokers while maintaining info reporting in this bipartisan legislation,” he said in a floor speech.

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Democratic Sen. Mark Warner would support ‘small carve-out’ on filibuster to pass voting-rights legislation

Mark Warner
Sen. Mark Warner of Virginia.

  • Sen. Mark Warner would back a “small carve-out” to the filibuster to pass voting-rights legislation.
  • Warner said he supports the For the People Act and lamented the raft of restrictive GOP-led voting bills.
  • He lamented the result of the 2013 filibuster rule change as it pertains to the Supreme Court.
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Democratic Sen. Mark Warner of Virginia on Sunday said that he would support a “small carve-out” on the filibuster to pass voting-rights legislation.

On “Fox News Sunday,” he cautioned against the Senate morphing into the House, where the majority party holds enormous sway over legislation, emphasizing the importance of preserving voting rights.

“I don’t want the Senate to become like the House,” Warner said. “But I do believe when it comes to voting rights, when it comes to that basic right to exercise and participate in democracy, I get very worried what’s happening in some of these states where they are actually penalizing, saying if you give somebody water waiting in line to vote, or in states like Texas where they’re saying a local government can overcome the results of a local election. That is not democracy.”

He added: “If we have to do a small carve out on filibuster for voting rights – that is the only area where I’d allow that kind of reform.”

Warner supports the sweeping voting-rights legislation known as the For the People Act, also identified as S.1, which would end partisan gerrymandering, expand early and absentee voting, establish national standards for voter registration, and blunt voter purges, among other measures.

Read more: Gov. Kristi Noem’s inner circle is packed with family, Trump aides, and connected South Dakotans. Meet the gatekeepers for her potential 2024 presidential run.

Democrats would also like to pass the John Lewis Voting Rights Advancement Act, which would restore federal preclearance from the Voting Rights Act of 1965 that was weakened in the 2013 Supreme Court decision Shelby County v. Holder.

Former President Donald Trump’s false election claims have only deepened the partisan divide on voting rights, and GOP congressional leaders have come out against the Democratic-led voting bills.

Last month, a vote to advance the For the People Act failed 50-50, with Democrats unable to win any Republican support. In order for the bill to pass under current rules, it would need to meet the 60-vote threshold to overcome a legislative filibuster.

In an evenly divided Senate, that task has become nearly impossible, especially since the bill cannot be passed through the budget reconciliation process and moderate Democratic Sens. Joe Manchin of West Virginia and Kyrsten Sinema of Arizona oppose nixing the filibuster entirely.

Democrats, who have strongly opposed the raft of restrictive voting bills that have passed this year in states like Arizona and Florida, sense a narrowing window for voting rights as the 2022 midterm elections approach.

In the interview, Warner questioned former Senate Majority Leader Harry Reid’s 2013 decision to change the filibuster rules for most presidential nominees, which now only require a simple majority.

“I would wish we wouldn’t even have started this a decade ago,” he said. “When the Democratic leaders actually changed the rules, I don’t think we would have the Supreme Court we did if we still had a 60-vote margin on the filibuster.”

He added: “But we are where we are, and the idea that somehow to protect the rights of the minority in the Senate, we’re going to cut out rights of minorities and young people all across the country, that’s just not right to me.”

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Infrastructure talks enter last-ditch stage as both Republicans and Democrats eye gas tax increase

Mitt Romney congress
Republican Sen. Mitt Romney of Utah.

  • Sen. Mitt Romney told Insider a bipartisan group is weighing indexing the gas tax to inflation.
  • The gas tax hasn’t been raised since 1993.
  • Other Democrats appeared noncommittal, reflecting the delicate state of the talks.
  • See more stories on Insider’s business page.

Republicans and Democrats are eyeing a potential increase to the gas tax as both parties entered a chaotic last-ditch effort to strike a bipartisan infrastructure deal after a month of failed discussions between President Joe Biden and Senate GOP

The bipartisan group is in the early stages of assembling a plan they hope will draw at least 60 votes in the evenly-divided Senate. The cohort is equally split between Republicans and Democrats.

It includes Republican Sens. Mitt Romney of Utah and Rob Portman of Ohio, as well as Democratic Sens. Joe Manchin of West Virginia, Kyrsten Sinema of Arizona; and Jon Tester of Montana. The group emerged after Biden pulled the plug on negotiations with Sen. Shelley Moore Capito of West Virginia, who had been Republicans’ chief negotiator since April.

Romney told Insider on Thursday that the new working group was weighing indexing the gas tax to inflation. The 18-cent levy hasn’t been raised since 1993. “It keeps it at the same value that it has today,” the Utah Republican said.

The White House has previously said bumping the gas tax was off limits given Biden’s pledge to not hike taxes for households earning under $400,000. They did not immediately respond to a request for comment.

But the idea gained some momentum among Democrats when Sen. Dick Durbin of Iowa, second-ranked in the chamber, said he believed it “ultimately has to happen.”

“I look at it as a user fee. We pay taxes on gasoline because we want to drive our cars on safe roads,” Durbin told reporters.

Still, other Democrats in the group like Tester appeared noncommittal. “It’s not one of my favorite things, but we’ll see what the entire deal looks like,” he said in an interview. “I gotta see it in the context of everything, see what stays in and drops out.”

Sen. Mark Warner of Virginia, another Democrat in the group, declined to answer whether he supported it, a sign of the delicate state of the negotiations. “I actually think it’s better … until the cake is fully baked, to keep the ingredients quiet,” he told Insider.

Seth Hanlon, a tax expert and senior fellow at the liberal-leaning Center for American Progress, projected that indexing the gas tax to inflation would generate between $30 billion to $35 billion over a decade.

“It would be borne by consumers,” Hanlon told Insider. “We could get roughly the same revenue by rolling back the 2017 corporate tax cut by a fraction of a percentage point.”

He added that indexing the gas tax could have “modestly positive environmental effects,” though not if it’s only paired with spending focused on physical infrastructure and if it omits climate.

Biden’s two-part economic plans amount to $4 trillion in fresh spending on physical infrastructure like roads and bridges, as well as caregiving, cash payments, universal pre-K, community college, and a wide range of measures.

Both parties remain far apart on the scope of an infrastructure bill and how to pay for it. Other Republicans are increasingly signaling that climate provisions wouldn’t be included in their package.

Biden, along with congressional Democrats, are pushing clean energy tax incentives, a national system of electric vehicle charging stations, and federal funds to retrofit homes.

“If they’re looking for a line item that says ‘climate,’ they’re not going to see that,” Sen. Lisa Murkowski of Alaska said of Democrats.

A few Senate Democrats have stepped up their criticism of the bipartisan talks in recent days, warning that such talks risk omitting measures to combat climate change in an infrastructure deal. Another top Democrat threatened to withhold his vote if climate wasn’t sufficiently addressed.

“On a big infrastructure bill, to pass on climate altogether? No way!” Sen. Ron Wyden of Oregon, chair of the Senate Finance Committee, told Insider. “Think I’m blunt enough? No way.”

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US senators urge stricter crypto regulation after a flood of ransomware attacks

IMG_3283
Sen. Mark Warner (D-VA) on January 30, 2020 and Sen. Roy Blunt (R-MO) on February 3, 2020 both in taken in Washington, DC.

Two US senators called for stricter cryptocurrency regulation after a flood of ransomware attacks that plagued the country in the past months.

Democratic Senator Mark Warner of Virginia, chair of the Senate Intelligence Committee, told NBC Meet the Press on Sunday that regulators need to scrutinize the cryptocurrency loopholes that help criminals carry 0ut cyberattacks.

“There was some good things coming out of distributed ledger technology, but we are seeing now some of the dark underbelly,” Warner said. “If a company is paying, if there’s not some transparency of that payment, the bad guys will simply find another way to hide it.”

The senator said while there has been some progress when it comes to bipartisan legislation, the debate about cryptocurrencies and ransomware is “just starting.”

In May, the Colonial Pipeline paid DarkSide Ransomware a $5 million ransom to restore services, Bloomberg reported. The transaction was said to be untraceable.

The following month, JBS, the largest meat supplier in the US, revealed it was hit by a cyberattack that affected some of its systems. Whether there was a payment of ransom or not remains unclear.

Republican Senator Roy Blunt of Missouri, also a member of the Intelligence Committee, said regulators need to demand more transparency when it comes to attacks like these to protect the American financial system.

“Nobody wanted to report that they had been hacked. That was a fight we’ve been having now for almost a decade,” he told NBC Meet the Press. But “the only way you can begin to get on top of this is to know how pervasive the problem is.”

He continued: “We have a lot of cash requirements in our country, but we haven’t figured out in the country or in the world how to trace cryptocurrency.”

“There ought to be more transparency if a company does pay, so we can go after the bad guys,” Warner said. “Right now what’s happening around ransomware, not only are the companies often not reporting that they are attacked, but they’re not reporting the ransomware payments.”

The Biden administration is reportedly looking at how to increase oversight of the cryptocurrency market to protect retail investors, sources told The Washington Post. The administration is also analyzing potential gaps that may be used to finance illicit activities, sources said.

US Treasury secretary Janet Yellen has been critical of cryptocurrencies in the past, calling out their misuse, which she described in February as “a growing problem.”

“I see the promise of these new technologies,” the former Federal Reserve chief said. “But I also see the reality: cryptocurrencies have been used to launder the profits of online drug traffickers; they’ve been a tool to finance terrorism.”

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2 Democratic Senators are already saying Biden’s infrastructure plan probably needs to change

Joe Manchin
Sen. Joe Manchin (D-WV).

  • Democrats in the Senate are already voicing their concerns with the infrastructure package.
  • Sen. Joe Manchin says he’s concerned about the increase to the corporate tax rate.
  • And Sen. Mark Warner has “already expressed some concerns” and wants more input.
  • See more stories on Insider’s business page.

Two Democratic senators have already voiced concerns about President Joe Biden’s $2 trillion infrastructure plan.

One of them is Sen. Joe Manchin, a moderate Democrat from West Virginia who has already proven himself to be an outsized presence in the razor-thin Democratic majority. He was also a pivotal voice against the inclusion of a $15 minimum wage in the American Rescue Plan.

Now, he’s expressed his concerns with the infrastructure package. In an interview with Talkline, a West Virginia radio show, Manchin said that, “as the bill exists today, it needs to be changed.”

Regarding Biden’s proposed increase of the corporate tax rate from 21% to 28%, Manchin indicated that he doesn’t support the 28% figure and stressed that the international average is a few percentage points lower. The rate “should have never been under 25%,” he said. “That’s the worldwide average. And that’s what basically every corporation would have told you was fair.”

When asked if he would not support a bill that raises the corporate tax rate from 21% to 28%, Manchin said: “Well, the bill basically is not going to end up that way”

Manchin also said the bill wouldn’t be passed by reconciliation “unless we vote to get on it.” When radio host Hoppy Kercheval said “they” could pass the bill by reconciliation.

“No, they can’t. Not unless we vote to get on it,” Manchin said in response. “And if I don’t vote to get on it, it’s not going anywhere.”

Meanwhile, in a briefing on Monday, Biden said he was “not at all” worried that raising that rate would drive corporations to different countries. Treasury Secretary Janet Yellen also argued in support of a global minimum tax rate today.

As Politico reports, Manchin isn’t alone: Another Democratic senator, Mark Warner of Virginia, has also expressed concerns.

“I’ve had some outreach from the White House, but it was more heads-up than input into the development of the package,” he said, according to Politico. “So I’ve already expressed some concerns.”

Getting Democrats on board with the infrastructure package will be key to its passage, as Senate Minority Mitch McConnell has already said that it won’t get any GOP votes in the Senate. That means Democrats will likely have to compromise internally amongst themselves,

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