Split over crypto tax threatens to slow US infrastructure bill.

Biden and his supporters are pushing back against a last-minute effort by a bipartisan group of senators to limit a proposal in the infrastructure bill to increase federal regulation of cryptocurrencies.

Treasury Secretary Janet L. Yellen spoke with lawmakers on Thursday to raise objections to the effort led by Senate Finance Committee Chairman Ron Wyden (D-Ore.) and two Republican senators to weaken the legislation’s proposed cryptocurrency overhauls, according to sources who spoke on the condition of anonymity to share details of private conversations.

The tight lobbying push helped stall plans to finish voting on the bill on Thursday night, and now it appears debate will stretch into the weekend.

Yellen lobbied Wyden about the matter, the sources claimed.

Last month, the White House and Sen. Rob Portman (R-Ohio) agreed to a proposal to require increased tax compliance for cryptocurrency brokers as a way to help pay for the bipartisan infrastructure bill.

The deal came under intense criticism from cryptocurrency investors, who have argued it would give the Biden administration sweeping powers to virtually cripple the growing field of cryptocurrencies.

Some senators had hoped to pass the bipartisan bill on Thursday night, but the debate bogged down and the cryptocurrency fight remained one of the unresolved issues.

The episode also reflects the extent to which cryptocurrencies — which have emerged as a trillion-dollar industry from obscurity less than a decade ago — have begun to upend politics at the highest level.

Jason Furman, a former Obama administration economist, said it is important for Treasury to have “the flexibility” to regulate cryptocurrency players who try to evade taxes on the increases in the value of their coins, particularly given the potential for future and unforeseen innovations in the sector.

“If the technology makes it impossible to know people’s capital gains, then the technology should not exist,” Furman said. “It cannot just be the exchanges. You have to know from beginning to end how much someone paid for the coin, how much someone sold the coin for, and be able to match those two up.”