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The government can't crack crypto regulation

Good morning! This Tuesday, the fight over crypto regulation is just getting started, former Samsung leader Jay Y. Lee is getting out of prison, and there's a new Instagram trend, but only if you're Gen Z.
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Senators working on a roughly $1 trillion infrastructure bill thought it'd be a good idea to tap the fast-growing crypto industry to help pay for it. But then the crypto world said: Not so fast.
The first major battle between crypto and the Washington establishment offered glimpses of the major issues at play — and how crypto can actually fight back.
The crypto proposals would've raised roughly $28 billion to pay for the legislation, mainly through taxes. The most controversial proposal would have required miners and node operators, whose work undergirds the blockchains that cryptocurrencies rely on, to report crypto transactions like brokerages. That quickly ignited a host of technical, privacy and other concerns.
But Congress "did not fully appreciate the complexity and nuance of the technology they seek to regulate,'' crypto experts Joe Carlasare and Amanda Cavaleri wrote in Bitcoin Magazine. So this was just a "fire drill" in what looks set to be a protracted process for the industry, they added.
This all kicked off a ton of lobbying and campaigning. Fight for the Future's "Red Alert" campaign issued a stern warning, seeking to rally crypto supporters to shape the final bill.
And the pressure got results. After a weekend of wrangling that saw multiple revisions of the Portman-Warner-Sinema version, Sen. Pat Toomey, in a joint press conference yesterday with Sen. Cynthia Lummis, announced that the six senators had reached an agreement on new language.
But then it all got torpedoed thanks to opposition by Sen. Richard Shelby over an unrelated issue. The amendment required unanimous consent of the Senate to get added. Jerry Brito, executive director of Coin Center, a crypto industry trade group, said on Twitter that his members would seek to amend the infrastructure bill in the House.
The battle is just getting started. Democratic Rep. Don Beyer of Virginia has a crypto-regulation bill in the works in the House. And regulators remain eager to come up with new rules for how the industry should operate. But the infrastructure-bill conflict also demonstrated crypto's power. "It's always tempting to make fun of crypto bros," Slate's Jordan Weissmann wrote. "It's clear, though, that they've learned to flex some lobbying muscle."
— Ben Pimentel (email | twitter) and Tomio Geron (email | twitter)
A version of this story appears in the Protocol | Fintech newsletter. Subscribe now if you're not already getting it.
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Expanding to Asia can be difficult, but Singapore is here to help. The Singapore Economic Development Board's guide to setting up in Singapore has all the information you need to find the right partners, talent, and connections to succeed in Asia.
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