President Biden signed the Infrastructure Investment and Jobs Act into law on Monday, but members of Congress are wasting no time to introduce legislation to fix the cryptocurrency provisions hidden in the depths of the new law. Senator Ted Cruz (R‑TX), Senators Cynthia Lummis (R‑WY) and Ron Wyden (D‑OR), and Representatives Patrick McHenry (R‑NC) and Tim Ryan (D‑OH) have all introduced different pieces of legislation to address the problem.

The Issue at Hand

Before diving into each of the new bills, it’s important to recall just what was signed into law on Monday. With all the spending on roads, bridges, and other avenues that are traditionally considered “infrastructure,” Congress had to include pay-for provisions that would secure the funding needed to offset the spending.

One source of funding that was identified was the cryptocurrency industry. In two short amendments to the Internal Revenue Code, Congress set what amounts to a de facto ban on legal cryptocurrency mining in the United States as well as a new level of surveillance that is enforced by threat of felony charges. In doing so, they found $28 billion in expected tax revenue (at least, according to the Joint Committee on Taxation) to offset some of their expenditures.

Fortunately, a number of new bills emerged this week to address the broker provision to better clarify who is affected, and some of them also address the reporting requirements mandated in Section 6050I(d).

Representatives McHenry and Ryan’s Effort to Redefine and Repeal

Representatives McHenry and Ryan’s bill, titled the Keep Innovation in America Act, would redefine the broker provision such that it only covers brokers that are hired to perform trades. This new definition would include exchanges but exclude miners and developers. And it limits the information reported to that which is voluntarily supplied. Furthermore, the bill would repeal the $10,000 reporting requirements in section 6050I(d). Both objectives are clear wins for the industry.

However, Representative McHenry does not stop there. He also seeks to limit the Treasury Secretary’s ability to define new technology as “digital assets” for tax purposes––an especially important consideration for an industry that continues to evolve each day. And finally, he calls for a broader study on the reporting requirements in section 6050I(d).

Senator Cruz’s Full Repeal

Senator Cruz takes a different path in his legislation. Rather than keep and redefine the broker provision, Senator Cruz’s legislation is designed to repeal the entirety of Section 80603 of the Infrastructure Investment and Jobs Act, the section of the bill that created new cryptocurrency reporting requirements.

In a statement, Senator Cruz said, “As a deliberative body, the Senate should have done its job and held hearings to properly understand the consequences of legislating on this emerging industry before we risked the livelihoods and privacy of participating Americans.” By removing the provisions completely, the bill would not only correct the record but also make it clear that policymakers need to understand the industries that they affect before they levy new legislation.

The only challenge that remains for Senator Cruz’s approach is in confronting the $28 billion in expected revenue that is supposed to come from this section of the law. However, that challenge may be easier than it seems. Thus far, there has been no explanation of the JCT’s tax revenue estimate, and there has been no indication that the number takes into account the possible effects the Act might have. For example, how is the estimate impacted if the entire industry leaves the country like it did when China cracked down on cryptocurrencies? Or, how is it impacted by the fact that few––if any––miners, developers, or wallet providers will be able to comply with the requirements? It’s by asking questions like these that Senator Cruz can make the case that the $28 billion challenge is no challenge at all––as the money was never going to exist in the first place.

Senators Cynthia Lummis and Ron Wyden’s Clarification

Finally, Senators Cynthia Lummis (R‑WY) and Ron Wyden (D‑OR) introduced legislation that would clarify how a “broker” is defined. Namely, the bill would exclude miners, wallet providers, and developers.

However, their legislation does not address the issues caused by section 6050I(d). It may be that 6050I(d) was left in place to, in Senator Wyden’s words, ensure the cryptocurrency industry pays the taxes they owe. However, 6050I(d) is about much more than taxes. In fact, it’s very possible that 6050I(d) is due for a Constitutional challenge before the Supreme Court. As explained in this new Cato Briefing Paper, requiring someone to report the details of a business transaction where there are only two parties may very well be a violation of the Fourth Amendment. Although the Supreme Court ruled that a third party could be required to report information, no such case has been made regarding two-party transactions. In fact, Section 6050I(d) was only established after the Court made its decision.

Conclusion

If the cryptocurrency provisions go unchanged, Senator Cruz’s concerns that the Infrastructure Investment and Jobs Act “will stifle innovation” and “push key aspects of the industry overseas” may just come to fruition. However, these approaches, each with their own costs and benefits, offer a chance to fix the law.