Legislative roundup: 2B2B, crypto, energy credit dispute

Congressional Republicans weigh a second reconciliation process, similar to the legislative maneuvering used to pass the One Big Beautiful Bill Act; the Senate is expected to take up a crypto regulatory overhaul; and multiple Treasury nominees are blocked over the White House targeting of energy credits. Here’s a roundup of issues to monitor during Congress’s August recess. 

Another ambitious GOP goal: Reconciliation 2.0

Republican lawmakers have just begun the job of selling the recently passed One Big Beautiful Bill Act (OBBBA) to their constituents back home, but some are already talking up the next potential bill using the budget reconciliation process.

With a new fiscal year starting Oct. 1, Republicans will have the opportunity to use this procedure – which allows them to circumvent the Senate filibuster and pass certain types of legislation with just a simple majority — up to two more times before next year’s midterm election. However, given the breadth of tax policy enacted in July’s bill, future legislation appears less likely to be as tax-centric.

Before leaving for the congressional summer recess, the Republican Study Committee, which bills itself as the “conservative caucus” and claims 189 of the House’s 219 GOP members, launched a Reconciliation 2.0 Working Group to develop a framework for another bill. The group is soliciting input from its members, conservative senators and outside GOP-aligned groups, but one thing appears clear: on the heels of the OBBBA’s $4.1 trillion price tag, anything coming from the House will be focused on deficit reduction. (This tally comes from the Congressional Budget Office’s estimate of $3.4 trillion in reduced revenue collection and more than $700 billion in additional interest payments on the federal debt.)

Among the ideas that have been floated for inclusion in a “2 Big, 2 Beautiful” bill are modifications to provisions rejected for the OBBBA — including Medicaid expansion cost-sharing cuts for the states, beyond the Medicaid changes already made in OBBBA; codification into law of some of the federal government cuts made by the Elon Musk-led Department of Government Efficiency (DOGE) earlier this year; and further government reforms and spending cuts. On the tax front, Senate Finance Committee Chair Mike Crapo, R-Idaho, says there were about 200 additional ideas proposed to tax writers that didn’t make it into the OBBBA; he has not provided any details but says he is supportive of another bill this year.  

Speaking to Punchbowl News last week, Sen. Steve Daines, R-Mont., a member of the Finance Committee, talked up capital gains relief as a potential area of focus. Ideas here include indexing capital gains for inflation and further limiting or eliminating capital gains taxes on home sale profits, something President Donald Trump has recently expressed an interest in.

Several members in both the House and Senate who threatened to vote against the final version of the OBBBA have intimated that they ultimately voted yes because GOP leaders promised them another chance to cut spending and make additional changes to programs. Senior congressional and White House officials, though, say no “side deals” were made to secure the necessary votes. 

While the OBBBA ultimately passed on a timeline most doubted was possible, the process was a significant challenge for Republicans, and it is not clear that all members will be on board for another go. At least one senator — Lisa Murkowski, R-Alaska, who proved to be the deciding vote in the upper chamber — has been highly critical of elements of the OBBBA, and she and a number of swing-seat House members are unlikely to support the level of spending cuts that more conservative lawmakers are targeting. 

Crypto CLARITY may be on horizon

The administration has launched a review of the rules around digital assets, aligning with work already underway in Congress to change governmental treatment of cryptocurrencies and potentially revise the tax treatment of these assets.

On July 31, Securities and Exchange Commission (SEC) Chair Paul Atkins announced a new agency initiative entitled “Project Crypto” to accelerate new “purpose-fit disclosures, exemptions, and safe harbors” financial disclosure rules around digital assets, including for initial coin offerings, airdrops, mining/staking and other potential network rewards. On Aug. 7, President Donald Trump issued an executive order directing the Labor Department, in coordination with the SEC, to re-evaluate rules around “alternative asset” investments in tax-advantaged retirement plans to allow plan fiduciaries to direct funds toward those assets, including cryptocurrencies and other digital assets.

This follows recent passage by the House of Representatives of the CLARITY Act (H.R. 3633), a bill to reform financial regulatory treatment of digital assets, legislation that also could become a vehicle for changes to tax treatment of cryptocurrencies. Sen. Cynthia Lummis, R-Wyo., an outspoken advocate for new rules around digital assets, has introduced a bill to change tax treatment of certain cryptocurrency transactions, including annual and per transaction de minimis thresholds, and the tax treatment of types of income unique to cryptocurrencies, such as mining and staking.

There is an effort underway to legislate on financial and tax regulations for digital assets before the end of the year, as political dynamics can make legislating in an election year more difficult. 

Trump’s executive order on wind, solar raises concerns for some in GOP

Ahead of Treasury Department guidance due by Aug. 18, Sens. Charles Grassley, R-Iowa and John Curtis, R-Utah, have placed holds on several Treasury nominees in an effort to ensure the Trump administration does not undercut the already limited time remaining for wind and solar projects to qualify for investment and production tax credits.

As part of OBBBA negotiations, a group of Republican senators including Grassley and Curtis managed to push out the termination of the Section 45Y and Section 48E credits for wind and solar, to provide more time for businesses with investments already in the works.

Under the OBBBA, wind and solar projects must be placed in service by the end of 2027 to qualify for the credits, unless they begin construction within 12 months of the law’s enactment — then they have four years to place the facility in service. A group of House Republicans, who were seeking swift termination of almost all the Inflation Reduction Act’s (IRA) energy tax credits, expressed outrage over the extended timeline but were convinced to support the amended version with President Trump’s assurance that the administration would strictly enforce the 2027 end date.

The result of this presidential promise was a July 7 executive order that said Treasury had 45 days to issue guidance that would “strictly enforce the termination” of the credits, including review of the long-held guidance on the meaning of “begin construction.” This instruction has raised concern that the bar could be raised significantly, making it impossible for many wind and solar projects to reach it before next July — and undercutting what Grassley and Curtis say was the intent of the legislation. (The tax credits would have been available through 2034 under the IRA.) 

The holds the two senators have imposed impact three Treasury nominations: Brian Morrissey Jr. for Treasury’s general counsel, Francis Brooke for assistant secretary for international trade and development and Jonathan McKernan for undersecretary of domestic finance. Grassley said he will maintain the holds until he “can be certain that such rules and regulations adhere to the law and congressional intent.”