Lawmakers push back against Biden’s IRS rule redefining DeFi participants as “brokers,” fearing it could stifle U.S. cryptocurrency innovation and drive it overseas.
Lawmakers Introduce Resolution to Overturn Controversial IRS Rule
U.S. Senator Ted Cruz (R-Texas) and Representative Mike Carey (R-Ohio) have introduced a joint resolution aiming to overturn a controversial IRS rule that redefines decentralized finance (DeFi) participants as “brokers.” The rule, finalized by the IRS on December 30, 2024, would impose strict reporting requirements on these participants, potentially stifling U.S. cryptocurrency innovation.
Lawmakers Warn of Negative Impact on U.S. Innovation
Cruz and Carey argue that the measure creates unnecessary burdens for the digital asset industry and risks pushing innovation abroad. Cruz stated,
The Biden administration’s rule attempts to drive American cryptocurrency innovation overseas. This regulation undermines the purpose of DeFi technology: to enable individuals to freely buy, sell, and exchange digital assets.
Support from Other Lawmakers and Industry Groups
The resolution is supported by a coalition of lawmakers, including Senators Cynthia Lummis (R-Wyo.), Thom Tillis (R-N.C.), Tim Sheehy (R-Utah), and Ted Budd (R-N.C.). Representative Carey leads the effort in the House. It is also backed by several industry groups, such as the Digital Chamber, Blockchain Association, and Defi Education Fund.
Proponents Highlight Concerns Over IRS Resource Strain
Proponents of the resolution argue that overturning the rule will help safeguard the digital asset sector and encourage innovation within the U.S. market. They warn that the new rule would overwhelm IRS resources and complicate tax filing for digital asset holders.
Call for Swift Congressional Action
Cruz and Carey are urging Congress to act swiftly on the resolution and challenge what they see as regulatory overreach. The future of the resolution is uncertain, but it underscores the ongoing debate between regulation and innovation in the rapidly evolving cryptocurrency space.
Stay informed on this crucial issue and support efforts to protect cryptocurrency innovation in the U.S. Contact your representatives today.
