Crypto on Tap After Tax Megabill, but Goodwill in Short Supply

Republicans are pushing for policy changes on traditionally bipartisan issues like cryptocurrency, but in the aftermath of the GOP’s $3.4 trillion tax-and-spending bill there may be little goodwill left.

The House effort starts with a Ways and Means subcommittee hearing Wednesday on digital asset policy, where lawmakers will hear from the Blockchain Association and Fidelity Investments, among others. Senate Finance Committee Chair Mike Crapo (R-Idaho) said his panel was still forming its agenda, but pointed to bipartisan issues like trade, retirement, and the House-passed bill providing tax treaty-like benefits to Taiwan.

“There are a lot of tax proposals that are still out there,” Crapo said.

Some Democrats, still fuming from the Republican push of the massive law that supercharged Trump’s agenda, don’t appear to be in a cooperative mood. They say Republicans are already poisoning the well by pursuing a second partisan reconciliation bill with further spending cuts.

“We have spent so much time on this foolish, awful bill that I don’t know if they have bandwidth to do anything else,” said Ways and Means member Rep. Linda Sánchez (D-Calif.) after casting her vote against the tax bill.

Room for Crypto?

The GOP-controlled Congress didn’t include tax-related crypto legislation in their massive bill, and some lawmakers see momentum to move legislation related to the assets.

“What I would really like to work on is a lot of the bipartisan crypto tax and crypto policy that we have in the committee,” said Rep. Max Miller (R-Ohio). He pointed to bipartisan support for the Senate-passed legislation establishing a regulatory framework for stablecoins—digital assets pegged to currencies like the dollar.

Some Democrats in both House and Senate joined Republicans in a rollback of Biden administration rules on cryptocurrency tax reporting for decentralized finance markets.

Sen. Elizabeth Warren (D-Mass.) had a dimmer view for the prospects of cross-party collaboration in the space. She’s raised concerns that Republicans, and President Donald Trump, whose family companies have ownership stakes in some cryptocurrencies, are giving the industry a too-light regulatory touch as they consider market structure legislation.

“There’s definitely room for a bipartisan bill, if the process doesn’t get hijacked by the most extreme elements of crypto world,” Warren said. “The real question is, how much influence will the most extreme edge of crypto world have on writing this bill?”

Bipartisan Myth?

There are other areas with at least the potential for cross-party cooperation.

Crapo, with Finance Committee ranking member Sen. Ron Wyden (D-Ore.), released a discussion draft earlier this year full of tax administration fixes and rules for tax preparers.

Wyden said he doesn’t see Republicans offering any olive branches in the aftermath of the tax bill.

“It seems to me, what was talked about several times during the consideration of the first reconciliation bill, doing something bipartisan, is kind of a myth,” Wyden said. “They didn’t wait long after the signing of their bill to basically say, ‘We’re going to do another.’”

Sen. Ron Johnson (R-Wis.), who voted for the giant bill after threatening not to, said hardliners were wooed by GOP leadership’s promise of a second reconciliation bill that would include deeper spending cuts and offset the first bill’s multitrillion-dollar hit to revenue.

“I think I pretty well have a commitment they’re going to do that,” Johnson said. “Another reason is why I definitely had to vote yes, or I would have just dealt myself out of being involved in that process. And I want to be highly involved.”

Lawmakers in recent days say work on a sequel has already begun.

Some Extenders Left Behind

Republicans included a smattering of smaller expiring or expired provisions in their megabill, but not all of them. In the past, these would have been addressed in a bipartisan so-called extenders bill.

The law included longer runways for what could have been foundational pieces of such an extenders package. Those include the New Markets Tax Credit, low income housing credits, and a permanent extension of the so-called rum cover over.

Some items were left behind, such as a break for tuna canneries in American Samoa and the Work Opportunity Tax Credit. Those and other items may not get a legislative vehicle to hitch a ride on any time soon, said Joseph Boddicker, a counsel in Alston & Bird’s federal and international tax group and former adviser to Senate Republican tax writers.

“In the case of a partisan reconciliation bill, a second one, it seems unlikely that a lot of these ‘orphan extenders’ will be addressed,” he said.