This story was updated at 10:30 a.m. EST.
Senators are closing in on a way to pay a $12.7 billion conservation bill, a long-sought breakthrough for landmark legislation.
Their solution? Cryptocurrency.
For months, the bipartisan “Recovering America’s Wildlife Act” – HR 2773 and S.2372 – was blocked on how he would be paid. But people familiar with the negotiations told E&E News on Wednesday that they are considering closing a cryptocurrency tax loophole as a funding mechanism.
Specifically, the payment would involve clarifying cryptocurrency assets, according to three people familiar with the negotiations who were granted anonymity to speak candidly about sensitive conversations. This change would make it clear that the wash sale rules apply to cryptocurrency assets, just as they do today for securities.
Ashley Shapitl, spokeswoman for the Senate Finance Committee, which has jurisdiction over funding, confirmed that applying the so-called “wash sale rule” to cryptocurrency was “an option which we continue to discuss”.
As written, “RAWA” would provide $1.3 billion per year to states and territories, and $97.5 million per year to tribes, to assist in their efforts to conserve, restore and protect wildlife and of habitat.
A bipartisan coalition in the House and Senate supports the goals of the legislation and wants to pass it, seeing it as transformative. It is considered a natural successor to the Great American Outdoors Act, the 2020 law that fully and permanently reauthorized the Land and Water Conservation Fund for the first time since the program was established in the 1960s.
But members have been deadlocked for several months over how to finance it.
The Senate first sought to partially offset its version of “RAWA” through fees and fines paid by polluters. But some lawmakers in both parties were skeptical that he would sufficiently address the soaring federal deficit.
The House version, meanwhile, would have provided funding from the US General Treasury, with states required to provide at least 25% matching funds. It would also have exempted the measure from the usual apportionment rules that impose offsets for new spending. It was forbidden to tax hawks.
Now, the senators, who resumed the final “RAWA” negotiations, are rallying behind another mismatch. This would be achieved by defining cryptocurrency assets as securities – not properties – for the purposes of being subject to the IRS’ wash sale rule. This rule prohibits investors from claiming losses on securities sold at a loss and then repurchasing the same or a similar asset within 30 days.
In a sign of the appetite for that payout, lawmakers eyed savings in early versions of Democrats’ budget reconciliation bill, the “Build Back Better Act.” It was not included as a compensation in the final version of the Reconciliation Bill, the “Reduction of Inflation Act”, which allowed it to be reused for “RAWA”.
It’s unclear what the delay is now in its finalization for ‘RAWA’, although a person familiar with the plan maintained that the negotiations at the moment have been focused on trying to achieve as much savings as possible. .
Compensation from the fictitious sale rule, the person said, would reach either $11.2 billion or $12.5 billion over 10 years, depending on how the language is written. This is a new “score” from the Joint Commission on Taxation which has just been conducted over the past month.
This means that it reflects all the changes that have taken place in the crypto industry since the committee last performed a cost estimate on a very similar payout during the “Build Back Better” negotiations almost ago. one year. At that time, offsetting would have resulted in estimated savings of $16.7 billion.
None of these negotiations will matter if Congress can’t also agree to the terms of a long-term omnibus spending bill to fund federal operations for the remainder of fiscal year 2023.
The omnibus is the only viable legislative vehicle that ‘RAWA’ will attach itself to by the end of the year, and it remains unclear whether lawmakers will be able to cobble together such a bill or if they will be forced into it. to maintain the status quo.
Assuming an omnibus materializes, however, “RAWA” supporters are confident they’ll be poised for a legislative victory years from now, in addition to delivering a legacy for incumbent Sen. Roy Blunt (R-Mo. ), the leader of the Senate. co-sponsor alongside Senator Martin Heinrich (DN.M.).
“We’re getting closer,” said Rep. Debbie Dingell (D-Mich.), co-lead sponsor of the “RAWA” house, who was involved in the talks. “Wait another day.”
Journalist Timothy Cama contributed.