  How policy and regulation impact the crypto world – and the other way around By Nikhilesh De Managing Editor, Global Policy & Regulation Aug. 3, 2021 If you were forwarded this newsletter and would like to receive it, sign up here.
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Welcome to State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. I’m your host, Nikhilesh De. You’re probably here because you signed up, but in case you're not a fan, you can unsubscribe here.
Congress has been talking about crypto for years, and we’re finally getting a sense of what sort of regulations lawmakers might enforce. The biggest issue is a controversial tax provision within the Senate’s infrastructure bill. —Nik
Infrastructure Week  Congress had a busy week. (Kevin Dietsch/Getty Images) The narrative What a week. Seven days ago the biggest thing on my radar was a trio of Congressional hearings on crypto. By Thursday, we had two massive bills seeking to regulate the industry in different ways. The first bill, the U.S. Senate’s trillion dollar bipartisan infrastructure effort, would broaden the definition of a “broker” to capture all sorts of entities for the purposes of crypto tax collection. The second, by Rep. Don Beyer (D-Va.), is much more of a longshot but provides the most comprehensive effort to regulate crypto yet. Why it matters The infrastructure bill has sparked controversy in the crypto world due to just how broad its definition of a “broker” originally was. A revised version, and the one that’s in the actual bill introduced late Sunday, tones the definition down a tiny bit in that it no longer explicitly includes decentralized exchanges as brokers. But it doesn’t explicitly exclude miners or node operators either.
The main takeaway is that crypto has gotten on lawmakers’ radar as an industry that is permanent enough to help fund the government. Breaking it down Okay so the plus side for the crypto industry is this is a continuing recognition that crypto is not just a casino that’s going to disappear when traders get bored. Congress clearly expects this industry to stick around long enough to generate at least $28 billion in tax revenue for this infrastructure bill. It’s arguably the most concrete recognition of this from Congress, and yes, I’m including all of the hearings Congress has hosted in recent months.
The downside is the continuing confusion over just who exactly must file information reporting documents. Exchanges and OTC desks should have no difficulty complying, and the fact they’ll even be directed to a specific form to fill out may even make it easier for these trading platforms in lieu of clear IRS guidance on the matter.
The problems arise when we look at decentralized exchanges, node operators, miners, etc. It’s less clear how they would comply. The Joint Committee on Taxation (JCT), which “scores” provisions, meaning they evaluate how much would be raised through them, published a document stating the just-under $28 billion figure, but didn’t actually say where the figure came from. In other words, there’s no information right now on how the JCT expects these entities to report.
“It was inevitable” that brokers and dealers, registered exchanges and OTC desks would have to comply with these types of reporting standards, former lobbyist Reid Yager told me.
“Whether this year, in five years, they were going to get captured,” Yager said. “The fact that ‘broker’ could be interpreted to expand to software developers and providers, that’s an issue.”
We know that there’s bipartisan opposition to the specific wording of the provision – Sens. Ron Wyden (D-Ore.), who chairs the Senate Finance Committee (which oversees the IRS), Patrick Toomey (R-Penn.) and Cynthia Lummis (R-Wyo.) who are both on the Senate Banking Committee, have all publicly stated that they don’t see the current definition as being feasible to implement.
The almost odd part is Sen. Rob Portman (R-Ohio), who I’m told is behind the specific amendment, doesn’t intend to capture non-custodial entities like miners, according to a spokesperson.
“This legislative language does not redefine digital assets or cryptocurrency as a ‘security’ for tax purposes, impugn on the privacy of individual crypto holders, or force non-brokers, such as software developers and crypto miners, to comply with IRS reporting obligations. It simply clarifies that any person or entity acting as a broker by facilitating trades for clients and receiving cash, must comply with a standard information reporting obligation,” said Drew Nirenberg, the spokesperson.
However, at this point it doesn’t seem like Portman is willing to put this kind of language in the bill itself or in supplementary material that the IRS can point to in implementing the proposal.
So we now get about a week to see what amendments are offered and whether or not they’re accepted.
And then there’s the House of Representatives, which most likely won’t take the bill up till the fall, and whose members may have their own issues with the bill (both crypto-related and not).
If the general public is interested in providing feedback, they should reach out to their elected officials, says Kristin Smith of the Blockchain Association, Perianne Boring of the Chamber of Digital Commerce and Michelle Bond of the Association for Digital Asset Markets.
The Biden Bunch Changing of the guard  Key: (nom.) = nominee, (rum.) = rumored, (act.) = acting, (inc.) = incumbent (no replacement anticipated) Dave Uejio, acting Consumer Finance Protection Bureau (CFPB) director, will face his confirmation hearing for Assistant Secretary of Housing and Urban Development on Thursday. His potential CFPB successor, Rohit Chopra, appears to still be awaiting a final confirmation vote.
Elsewhere 
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