Biden spurns powerful Dem on cryptocurrency regulation in infastructure bill

President Biden distanced himself from a proposal by Finance Committee Chairman Sen. Ron Wyden and other senators Thursday to loosen proposed regulations on certain cryptocurrency reporting requirements in the bipartisan infrastructure bill.

Wyden, D-Ore, joined Sens. Pat Toomey, R-Pa., and Cynthia Lummis, R-Wyo., to oppose language in the bill they said would stifle innovation and impose burdens on people like Bitcoin miners that would be difficult to comply with. 

The trio of senators offered an amendment on the issue. But the authors of the bill – Sens. Kyrsten Sinema, D-Ariz., Rob Portman, R-Ohio, and Mark Warner, D-Va. – wrote a counter-amendment that the president endorsed instead. 

White House Deputy Press Secretary Andrew Bates said the administration supports the Portman-Warner-Sinema amendment to "clarify the measure to reduce tax evasion in the cryptocurrency market."

SENATORS AIM TO CLARIFY CRYPTOCURRENCY REPORTING REQUIREMENTS WITH AMENDMENT TO INFRASTRUCTURE BILL

"The Administration believes this provision will strengthen tax compliance in this emerging area of finance and ensure that high income taxpayers are contributing what they owe under the law," Bates continued. "We are grateful to Chairman Wyden for his leadership in pushing the Senate to address this issue, however, we believe that the alternative amendment… strikes the right balance."

But Wyden, Toomey and Lummis strongly disagreed, accusing the White House and their fellow senators favoring some parts of the crypto industry – specifically proof-of-work mining – over others. 

"The Warner-Portman-Sinema amendment provides a government-sanctioned safe harbor for the most climate-damaging form of crypto tech, called proof-of-work," Wyden said in a tweet. "It would be a mistake for the climate and for innovation to advance this amendment."

Jerry Brito, the executive director of the crypto think tank Coin Center, meanwhile said the White House-backed amendment is "disastrous." He said that the amendment would equate to "the U.S. Congress picking winners and losers." 

"He's right," Toomey tweeted. 

"The original language was too broad with respect to what is a broker," R Street Institute Senior Fellow Bryson Bort said. "The problem was that it was such a broad definition – does that mean that people that build software that crypto miners use, are they going to have to report to the IRS? What about if you build hardware? What if you're just providing the network service?"

Bort added: "This is government regulation playing catch-up to something that's been out there… There are going to be winners and losers in the because inherently you're deciding the net that governments going to come down on and you're swept up in that net or you get to watch it… swoosh right by you." 

"Our amendment protects miners as well as hardware and software developers," Lummis said in a tweet. "The other does not. The choice is clear."

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Representatives for Portman and Warner did not immediately respond to requests for comment for this story. 

The Senate tried to fast-track the infrastructure bill – which appears to have the votes to pass – via unanimous consent on Thursday night. But the cryptocurrency disagreement held up negotiations and Sen. Bill Hagerty, R-Tenn., refused to consent to expedited passage. 

That means the Senate is likely to vote to end debate on the bill Saturday and on final passage for it early next week. 

Fox News' Peter Doocy contributed to this report.