The federal government moved closer to regulating the growing cryptocurrency industry this week.
Along with the blessing of House Speaker Nancy Pelosi (D-CA), Democratic lawmakers effectively blocked Congress from reconsidering new tax provisions prior to voting on a $1.2 trillion infrastructure bill next month.
Lawmakers divided over push for regulation
The move is being denounced by critics as one that will jeopardize jobs and innovation in the cryptocurrency sector.
Nevertheless, proponents on Capitol Hill say they hope to pay for the massive infrastructure bill in part by introducing new IRS tax reporting requirements for cryptocurrency brokers, predicting that they will raise $28 billion in new revenue over the course of a decade.
Cryptocurrencies including Bitcoin are not backed by any government and can be traded anonymously outside of conventional financial systems. Critics of the technology say it is not only unstable but also serves to enable criminal activity.
As the industry has rapidly expanded, federal officials have expressed an increasing interest in regulating it. Such plans took a major step forward on Tuesday when Pelosi agreed to vote on the infrastructure proposal in its current form and without any provision for amendments.
“An overly broad statute”
“Democrat leadership is shutting out the voices of those who want to keep 21st-century innovations in America,” complained U.S. Rep. Ted Budd (R-NC) in a statement to Breitbart News. “We cannot pay for the so-called infrastructure bill on the backs of everyday crypto investors.”
Further complicating the matter is the fact that the U.S. government has reportedly discussed creating a digital dollar that would rival leading cryptocurrencies.
For her part, Rep. Anna Eshoo (D-CA) vowed to “continue to explore all options to improve the flawed cryptocurrency language in the Senate’s bipartisan infrastructure bill, including through the budget reconciliation process or standalone legislation.”
Blockchain Association Executive Director Kristin Smith echoed the frustration of other cryptocurrency proponents in a statement this week, declaring: “Despite the desire of several members of the House and Senate to fix the poorly designed crypto tax provision in the existing language, we will be left with an overly broad statute that will harm American innovators.”