The U.S. Infrastructure Bill that was passed earlier this month fueled much panic within the Bitcoin and crypto-community due to the last-minute crypto-tax provisions that were added to it. Some members of the Senate tried to effect amendments in order to expand on the language used in the bill. However, they did not succeed due to the lack of unanimous agreement amongst Senators.
The bill sought to acquire $28 billion in tax revenue through these added provisions. However, according to popular crypto-lawyer Jake Chervinsky, this move was aimed to “capture DeFi.”
In a recent podcast, the DeFi Chair of the Blockchain Association asserted that these crypto-provisions were announced just 9 days ahead of the final Senate voting in a bid to “blindside” the crypto-industry.
Since previous discussions related to the bill had “nothing to do with crypto,” Chervinsky believes that it was the U.S. Treasury Department that was the main culprit.
The lawyer further revealed that he was informed about the Treasury Department’s initial opposition to exempting network validators and software developers from the broad definition of “brokers.” This was because they wanted to “adequately capture De-Fi” which would not have been possible with these amendments.
“That’s why we couldn’t get the language changed to only capture the centralized exchanges. We found out very quickly that it wasn’t just a senator’s misunderstanding… The Treasury Department had played an important role in drafting the language and also [ensuring] that any revision we proposed was going back to the Treasury Department for their approval or rejection.”
According to the lawyer, the Department feared that excluding DEXs would build an argument for other participants in the DeFi space as well. This was the motive behind the competing amendment that sought to exempt only Proof-of-Work miners and not other validators.
The same was proposed by Senator Wyden and backed by the Treasury Department and the White House, he added.
“The idea that you would carve out an exemption for what is viewed as the really bad, horrible climate change-causing, ocean-boiling Proof-of-Work mining, but then not have that exemption for Proof-of-Stake validators just made absolutely no sense.”
The lawyer also called the Department’s involvement with crypto-inclusions in the infrastructure bill “Un-American.”