It was a topsy turvy week — “staggering,” a crypto veteran called it. One that saw United States Senator Ted Cruz and Senator Ron Wyden collaborate on behalf of the cryptocurrency and blockchain industry — albeit, in a lost cause. These events could eventually pave the way for future regulatory success, though it may not seem that way now.

To recap: The Biden Administration’s $1.2 trillion infrastructure bill was supposed to be all about roads and bridges but as the Senate vote approached, it also became about cryptocurrency taxation. Thanks to a last-minute provision added to the bill, which some crypto advocates warned could have dire consequences, the changes could drive BTC miners out of the U.S. and thwart future blockchain development.

“It will be a stunning loss for America and our ability to remain the innovation epicenter of the world,” warned venture capital firm Andreessen Horowitz.

A last-gasp compromise was reached with senators from both parties participating which briefly raised hopes, but any late changes to the bill required unanimous consent on the Senate floor. Alabama’s Richard Shelby scotched the effort, reportedly because it didn’t include his amendment for $50 billion in military spending — entirely unrelated to crypto taxation.

Thus, the infrastructure bill passed the Senate Tuesday with its proposal to generate $28 billion in tax revenues from crypto transactions largely intact, along with a definition of “brokers” subject to reporting regulations so broad that it could (potentially) include crypto miners, software developers, node validators and even those creating nonfungible tokens, or NFTs.

All is not lost

Upon further reflection, the sky may not be falling. The legislation will now move to the U.S. House of Representatives which will have its own priorities and modifications, and the timeline for implementation is still some two-and-a-half years away, so anything can happen. There might even be some long-term advantages for the crypto sector that will come from that week’s tumultuous events.

“The developments over the past week were massively positive,” Peter Hans, managing director at digital asset management firm Arca, told Cointelegraph, adding: “This is now firmly on the radar of Congress, which means they are starting to learn beyond the tired narratives of energy efficiency and ransomware payments.”

The industry still has to be on its guard, however, because the language in the bill is “broad enough to have the potential to be significantly damaging,” according to Matt Hougan, chief investment officer at crypto index fund provider Bitwise, told Cointelegraph. Even if is does not necessarily “guarantee a dire outcome,” he went on to add:

“Parts are vague and the worst ramifications are unlikely to hold up in court. But, interpreted in certain ways, it could indeed have significant consequences, stifle innovation and limit the growth of the industry in the U.S.”

“A lot is at stake,” as Rocco Marchiori, a certified public accountant and vice president of risk management at Blockware Mining, told Cointelegraph. "Everyone working in this space wants clarity,” especially “a clear definition of a broker,” because brokers under the law will have reporting requirements that go beyond what is demanded of traditional brokers. The Coinbases of the world are prepared to file 1099 tax forms as required, said Marchiori, but not developers or transaction validators.

“Yes, the bill has already passed the Senate with the initial, very vague language and is on the way to the House,” Hans said, but the House will make adjustments and then a reconciliation process takes place with the Senate, “so nothing is final.” Either way, added Hans:

“[Senator Robert] Portman was clear in the intention of the language, as was [U.S.] Treasury [Department], so the implementation of the end language has almost no chance to be the draconian descriptions that you are seeing in the media.”