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US lawmakers push to end ‘unfair’ crypto tax rule

US lawmakers are making moves to repeal an unfair crypto tax rule imposed by the IRS. The resolution must pass through the House and the Senate before possibly being signed into law by President Trump.

defi broker ruleus lawmakersirs regulationhouse ways and means committeeregulatory environmentsecfinancial innovationregulatory oversightirsdecentralized exchangespolitical landscapedigital asset transactionscryptocurrency sales

US Lawmakers Push to Overturn Controversial IRS “DeFi Broker Rule”

Recently, a resolution has been advanced by US lawmakers in the House of Representatives to repeal the contentious “DeFi broker rule.” This rule mandates brokers to report digital asset transactions to the Internal Revenue Service, a move that has sparked debates and concerns within the crypto community.

Background of the IRS Regulation

The IRS regulation, slated to come into effect in 2027, was approved on Dec. 5. It seeks to broaden existing reporting requirements to encompass decentralized exchanges and necessitate brokers to divulge gross proceeds from cryptocurrency sales, along with details about the taxpayers involved in these transactions.

House Ways and Means Committee’s Decision

During a committee markup on Feb. 26, the House Ways and Means Committee, a significant financial group in the House of Representatives, voted 26 to 16 in favor of passing the resolution to repeal the rule, signaling a growing opposition to the regulation.

  • Miller Whitehouse-Levine, the CEO of the DeFi Education Fund, criticized the rule as an overreach and called for its swift overturn to safeguard Americans' transactional freedom.
  • Ways and Means Committee Chairman Jason Smith expressed concerns over the regulation, stating that it could hinder America's position in the digital asset realm.
  • Former IRS Commissioner Charles Rettig highlighted the administrative challenges posed by the rule, suggesting it could overwhelm the IRS.

Potential Impacts and Future Prospects

If the resolution successfully passes through the House and Senate, it will then be up to US President Donald Trump to decide whether to veto or sign it into law. The move to repeal the rule has gained traction amidst a changing political landscape, with a rise in pro-crypto sentiment within the US government.

  • The Republican Party's majority control in Congress has sparked optimism among industry players, hinting at a potential shift towards a more crypto-friendly regulatory environment.
  • Recent developments, such as the SEC closing multiple cases against crypto firms, signify a positive trajectory for the crypto industry under the new leadership.

In conclusion, the push to repeal the “DeFi broker rule” underscores the evolving dynamics surrounding digital asset regulations in the US and sets the stage for a broader discussion on the intersection of financial innovation and regulatory oversight.