Sen. Ted Cruz (R-TX) introduced a bill Monday that would reverse the cryptocurrency regulations passed under the Infrastructure Investment and Jobs Act.
President Biden signed the $1.2 trillion legislation — a move that is projected to add at least $340 billion to the deficit, spend heavily on unpopular modes of transportation, and bankroll programs meant to curb climate change. However, the omnibus bill also contains provisions that tighten federal oversight of cryptocurrency.
When the Senate held a debate over the law in August, some lawmakers pointed out that the definition of the term “broker” in the text of the bill was unclear. Chamber of Digital Commerce President Perianne Boring told officials that “further clarifications are needed to ensure the digital asset ecosystem can continue to grow and flourish.”
At the time, Cruz expressed concern that the bill would “force every single participant in the cryptocurrency structure to operate as a financial institution, which would mean they would have to provide consumer information to the IRS, even if they don’t have access to that information.” He, therefore, introduced an amendment that would have clarified the language and protected the nascent blockchain industry.
After the bill was signed into law, Cruz drafted legislation to repeal the “overly broad and poorly-crafted provision from the infrastructure package that creates new reporting requirements for many participants within the blockchain industry.”
“The Lone Star State has quickly emerged as the main hub for the cryptocurrency industry, and that exciting industry is now in danger of being stifled and driven overseas by an overreaching provision in this newly-signed, reckless spending package,” Cruz said in a statement. “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.”
“I urge my colleagues in the Senate to repeal this harmful language that will create regulatory uncertainty and in turn an unnecessary barrier to innovation,” he added.
Cryptocurrencies — which are digital assets unregulated by governments or central banks — are growing in popularity. As of Wednesday, cryptocurrencies have a global market capitalization of $2.63 trillion, with Bitcoin alone constituting $1.14 trillion in value.
Meanwhile, some lawmakers have been eager to introduce federal regulations into the cryptocurrency market.
In July, Sen. Elizabeth Warren (D-MA) asked Treasury Secretary Janet Yellen to weigh “the dangers cryptocurrencies pose to investors, consumers, and the environment in the absence of sufficient regulation in the United States.”
Warren mentioned that 27% of hedge funds have cryptocurrency holdings, while banks’ holdings of digital assets create “liquidity, credit, market, and operational risks.” She also pointed to vulnerabilities introduced to the financial sector by “decentralized finance.”
“The longer that the United States waits to adapt the proper regulatory regime for these assets, the more likely they will become so intertwined in our financial system that there could be potentially serious consequences if this market comes under stress,” she wrote.