Senate negotiators – not always known for their tech savvy – made a breakthrough Monday over regulations on online transactions known as cryptocurrency.
The breakthrough is significant for two reasons: 1) Negotiators were able to reach a bipartisan consensus. 2) It deals with a largely new industry, which uses blockchain technology for online transactions.
A lead negotiator, Sen. Pat Toomey, put it more bluntly on Monday, describing cryptocurrency as “an issue that has been vexing us.” Another lead negotiator, Sen. Cynthia Lummis, called it “such a new subject to so many people in the US Senate.”
The Senate’s average age is 64.3 years – older than the House’s 58.4 years, according to the Library of Congress. And among US investors over 50, 76% say they haven’t even heard of cryptocurrencies, according to a recent Gallup poll.
A last-minute cryptocurrency tax provision was tacked on to the $1.2 trillion bipartisan infrastructure bill last week, which complicated infrastructure negotiations as a bitter dispute emerged over proposed tax reporting requirements for cryptocurrency transactions. It also prompted a sharp public outcry over the item’s initial language. On Monday, Toomey and Lummis announced an amendment to the provision, negotiated with the Treasury Department, focused on regulating digital assets by requiring brokers to report their transactions.
The negotiating group also included Sens. Rob Portman, a Republican, and Democrats Mark Warner and Kyrsten Sinema.
“The silver lining is we found out who in the Senate is interested in this subject who maybe previously didn’t know anything about” cryptocurrencies, Lummis said. The Wyoming Republican added: “We were finally able to illustrate that there’s a lot of people interested in digital assets and now have contact with their senator.”
American investors already are showing increasing interest in cryptocurrencies like Bitcoin. Among adults with $10,000 or more invested in stocks, bonds or mutual funds, either within or outside retirement funds, 6% say they own Bitcoin, according to the same recent Gallup poll. That’s up from just 2% who said the same in May 2018. That number climbs even higher, to 13%, for investors under 50 years old.
Gallup likens current Bitcoin ownership levels to gold, which 11% of investors say they own.
Lummis acknowledged the “space is moving so fast, the innovation is working at such a rapid rate that we will probably have to revisit this subject,” and called the amendment “legislation that sets some definitions in this space.”
The Point: Bipartisan negotiators took on the largely new-to-them frontier of cryptocurrency and made a deal – expanding our definition of “infrastructure” once again to keep up with the times.