Will crypto’s biggest bill finally clear the Senate?

• BTC-USD

Scott Melker discusses whether the Clarity Act can clear its 60-vote test and advance to a <a href="https://xpertsstudio.com/cathie-woods-ark-sheds-40-million-of-its-own-bitcoin-etf-ahead-of-senate-vote/” title=”Cathie Wood's ARK Sheds $40 Million of Its Own Bitcoin ETF Ahead of Senate Vote”>Senate vote, as lawmakers also weigh crypto tax reform and the future of the US Strategic bitcoin (BTC-USD) Reserve.

“The Daily Wolf with Scott Melker” airs every day at 12:00 p.m. Tune in for your daily dose of all things crypto.

Happy Crypto Clarity Act cloture day to those who celebrate. We are finally going to get some clarity, pun intended on whether crypto is going to get legislative direction in the United States of America. We’ve got that and a lot more today on the Daily Wolf. Let’s go.

What is up, everybody? Welcome to the Daily Wolf on Yahoo Finance. I am your host, Scott Melker, also known as The Wolf of All Streets. You can find me on the social medias down there at Scott Melker, especially on X and YouTube. Once again, I highly recommend that you check into my YouTube channel for my interviews at 9:00 a.m. Eastern Standard Time every day. Every day, they have been absolutely epic, especially yesterday’s Macro Monday. But now, we have the big Tuesday that we’ve all been waiting for. Here it is from NPR.

This bill could reshape crypto in America, and it’s sparking a major debate. Of course, that bill is the Clarity Act, which we managed not to talk about for a little while, but now it is actually on the table. Now, I want to once again be clear for those who are completely analyzing this the wrong way.

They are not voting on whether the Clarity Act passes today. At 2:15 p.m. Eastern Standard Time, the Senate votes on cloture on the motion to proceed to the Clarity Act. This is not the vote to pass the bill. It determines whether the Senate will stop debating whether to begin considering it.

It’s a vote on whether they should talk about it and vote, right? But it is still a major procedural step, and technically, although this won’t be the case, it’s the only time they would technically need 60 votes. I’ll tell you why that’s not really true, but a lot of people are pointing to the fact that you need a supermajority here, which means at least seven Democrats to get this past cloture before we take it to the Senate floor. Now, yesterday I told you

that it could be 52 Republican votes instead of 53 because Mitch McConnell has been missing in action for so long. I made a joke, which is exactly this. This is Mitch McConnell showing up to the cloture vote for the Clarity Act today. But I made a joke yesterday saying, I wonder if they’ll go full weekend at Bernie’s and somehow roll Mitch McConnell act for clear, uh, out for clarity, and two hours later, he rolled out of his house. The memes that it’s giving us are astounding, but the fact that they took a fully unrecovered Mitch McConnell out of his house to vote on this bill shows that maybe they do believe that cloture here can pass. So now they only need seven, uh, Senate Democrats to vote for this.

Now, let’s go through the procedural question here before. So what happens? 60 votes in the Senate today advances this to debate and amendments, right? The thing is, in theory, that would then lead to a vote on the bill, which would only require a simple majority of 51 rather than the 60. But the reality of any partisan legislation in the Senate, especially, is that the opposing party can effectively filibuster or just say they refuse to end debate, which then goes to cloture on the actual bill, instead of the cloture that we’re getting, which is the motion to proceed, which then requires 60 votes once again. There’s no world where Elizabeth Warren and the anti-crypto army allow this to go through on a simple majority.

So just to be clear, if it passes today, which I think it could because Democrats would make a lot of sense today for them to vote for this, even if they intend to vote against it down the road. It would be more politically palatable. They wouldn’t, uh, you know, receive the ire of the anti, uh, of the, excuse me, the crypto lobby that spends a ton of money in the midterm elections, and it would give them some some time to kick this down the road and actually debate it and try to get what they want into the bill. So I wouldn’t be surprised if cloture passes. It’s very clear that that is not the bill passing itself. So, as I told you,

yesterday or two days ago, technically, the Republicans at night received, uh, released an entire new version of the Clarity Act, right? And it had 126 changes requested by the Democrats. Well, a day later, the Democrats sent a version back to the Republicans, and per Punchbowl News just this morning, that was entirely rejected by the Republicans. So it’s very clear that right now we do not have consensus. So a vote for cloture would just mean that they’re going to continue debating it. It’s going to be very, very interesting to see what happens today. Now, remember,

even if all that happens, 60 votes today, debate and amendment, 60 votes to get past the filibuster, and then it passes, it still has to go back to the house, because this originally started in the house, and they either need to rewrite it there or they need to consolidate the two bills and reconcile them, and then to the White House. I think you should understand then that today is not the day. Today is a day, but I think it would still be very encouraging to see it not die today. If we do not get past cloture, many, including Mike Novogratz, have pointed out

that this is tabled, well, basically indefinitely. This could be the last chance, not being hyperbolic, for reasonable legislation around crypto for any time in the near future. So we really should be cheering for it, even if the bill isn’t perfect, to at least get past the vote today so we can see what the compromises will be and actually see this debated on the floor. Now, while the Senate fights over one enormous market structure bill, the House is actually tackling two narrower crypto problems, and that is these. It’s our next story.

House Committee releases sweeping crypto tax bill ahead of Wednesday markup. So this is good news. Uh, if you’ve ever, uh, owned crypto in the United States or especially used it, you know how difficult it is to understand what you’re doing according to the IRS tax code. So this is the first one, and the most basic problem that this addresses is small transactions. In this case, it would exempt qualifying crypto fees worth $10 or less from capital gains calculations. Now, since Bitcoin and crypto, including stable coins,

are viewed as property effectively in the United States or an asset. If you buy coffee with Bitcoin for $2, you now have a taxable sale of that Bitcoin. Either you’re up and you need to pay capital gains or you’re down and it’s a write off, but you have to calculate every small transaction you do in crypto as a capital gains, as a capital gain or a capital loss, and nobody wants to do that, which has prevented people from actually using crypto for its intended purpose

for years. Well, they’re looking to create a de minimis exemption here. So this house, this just house committee, by the way, right? So a whole long legislative process would have to come after this. But we’ve seen de minimis exemptions floated as high as $400 or $500. $10 is a rounding error, but I guess that it’s a good start. It’ll apply to network, trading, and liquidity fees, uh, and it would just make tax accounting much, much easier in this case. So really what this bill is doing, it’s removing some ridiculous tax friction from using crypto.

But it also is going to make crypto investors follow more of the rules that already apply to stocks, most notably the wash trading rule. And if you are not familiar with this, this has been a huge tax loophole advantage for crypto investors that does not exist anywhere else. If you have a massive loss on crypto because of the way it’s classified, you can sell that, take the loss, and immediately buy back the position at the exact same price. So if you bought Bitcoin at $120,000, you could have sold it at 60, bought back the entire position, taken a $65,000 per Bitcoin capital gains loss that you can use as a write off and still have the same position. You can’t do that with stocks.

Wash rule with stocks say you have to wait 30 days uh, so that you can’t take that tax advantage. Crypto’s had that. That would be eliminated actually in this uh, proposed action here. The second action that’s being taken by a House Committee is this. Strategic Bitcoin Reserve Bill set for House Committee vote Wednesday. Guys remember the Strategic Bitcoin Reserve, right? One of Donald Trump’s biggest promises, he wrote an executive order about it over a year ago. We were supposed to get a very clear accounting of what agencies held what crypto and how, and we still don’t even have that audit. But to be fair, we still don’t even know if the gold exists in Fort Knox.

So why would Bitcoin be any different? I don’t understand how government red tape is so thick that you can’t even get a basic balance statement on what is being held. That’s a conversation for a different year. So what this bill would do is it would require that Bitcoin be held for at least 20 years. If you remember the executive order, the biggest promise was, we will not sell what we already have. Right? That’s an executive order and can be easily reserved, uh, reversed. So putting that into law would be huge. So not being able to sell any Bitcoin the government holds for 20 years, would require agencies to report how much Bitcoin they own. Shocking, I know.

I know. Require an independent annual proof of reserves audit, allow states to store Bitcoin in separate federal accounts while retaining ownership, and it would also continue from the executive order to study budget neutral ways the government could acquire additional Bitcoin because right now, you’re not allowed to print money to buy Bitcoin, you can’t raise taxes to buy Bitcoin. None of those things are here, and it specifically would violate another proposal from Senator Lummis, which was to revalue America’s gold reserves to buy Bitcoin.

None of those things will happen. So the government already has Bitcoin here. This bill would create a transparent vault basically, disclose what’s inside it, and generally prevent the government from selling that Bitcoin for 20 years. I think that we can all cheer for that. It’s reasonable. Let’s see if it gets passed and how far it can go. So Congress is trying to clarify crypto policy the same moment the Federal Reserve may make money more expensive. I’m sure that you’ve all seen this story. It’s a macro story, but it will inevitably affect the price of our beloved crypto assets.

Markets are bracing for a rate hike this week. Here’s what investors need to know. Last I checked, it was up to a 90% chance. I have been saying all along that Kevin Warsh’s job is to cut rates, and he’s not going to hike. Uh, the market is very much against my opinion. I guess that we will find out tomorrow because, uh, you’ll remember the memes that we did of Kevin Warsh when he was first put in, that he was supposed to be Trump’s sock puppet. You see Trump right there with the big T ring and his sock puppet. We’re going to find out if Warsh is in fact a sock puppet or if he’s going to hike rates. Now, remember, the Fed is not just him.

He doesn’t get to unilaterally decide. So he could say that we should keep rates the same, which probably is the most reasonable decision right now, or even cut rates, and the committee could go against him, the vote could go against him, and we could still see rates go up. But this is such a pickle right now, right? I mean, we have, for the first time in decades, I’m sure you saw this morning, 10-year yields have surpassed 5%. Now, remember, Powell cut rates, and we started a rate cutting cycle. That should have sent those yields down. It didn’t.

We have Bessent trying to talk yields down by bond market intervention. That has not worked. The bond vigilantes are not believing any of this. To be quite frank, I don’t think they believe a 25 bit rate hike either. I think that the Fed is largely neutered here. Nothing they do short of raising, you know, a full point or two points or doing something extremely aggressive, which obviously is not even in the cards, would even affect the market. So I actually think if they hike rates, we’ll probably see some temporary relief and then rates will once again rise, which is what’s happened every time that they’ve tried to intervene. I wouldn’t want this guy’s job

under any circumstances. He literally has an Estee Lauder fortune to his name. He could be living on a yacht and, uh, with, you know, my ties on the beach right now, and chose arguably the worst job on planet Earth, and it’s landed him in the worst possible position with the FOMC meeting today and then the decision tomorrow. Not great for him at all. We’re going to see how Bitcoin reacts if they do in fact hike rates, because in theory, that reduces liquidity, it’s bad for risk assets, and Bitcoin sometimes trades like one. Sometimes trades like gold, could go the other way.

Never know here. So regardless though, whatever the Fed does tomorrow, traditional finance is continuing to build the infrastructure required to offer crypto to clients. And this is what, I’ve not even seen this reported anywhere. Broadridge expands next gen digital assets capabilities to US wealth management firms. It’s one of the biggest stories that we could possibly get, and I haven’t seen it anywhere. So Broadridge basically provides much of the plumbing for Wall Street. So now financial advisors and brokerage firms use its systems to manage their accounts, process investments, produce client reporting, and Broadridge is now adding crypto and tokenized investments to that infrastructure, meaning

that your registered investment advisor, your RIA, all these institutions will finally be able to offer crypto in the same account as everything else, be able to advise people and custody it, and manage all of it. This is something we’ve been waiting for forever. If you talk to any RIA, they’ll say, I would love to, but I don’t know how to manage it, blah, blah, blah, blah. Now they will have the plumbing to not only advise you on crypto assets, be able to make money on handling them for you like they do for everything else. So you would be able to see your crypto besides your stocks and bonds in the same portfolio through your investment

advisor. Uh, Broadridge says its infrastructure already supports more than 18 trillion in daily traditional and tokenized securities activities, and their distributed ledger repo platform processes more than $351 billion each day. So instead now of forcing every financial advisor to build a crypto business from scratch, Broadridge is plugging crypto into the financial infrastructure advisors already use. Think of this as a white labeled platform that any registered investment advisor will be able to use to offer their clients crypto

services. All right guys, today is the big day. We’re going to see whether cloture passes. I just want to nail home the idea that that does not mean the Clarity Act has passed. It’s the first in many steps that we need to see, but it’s going to be exciting. We’ll be watching very closely today at 2:15 p.m. Eastern Standard Time. I guess you know what we’ll be talking about tomorrow. See you then. Peace.

Source: finance.yahoo.com