U.S. Senate to Vote on Reversing IRS Crypto Rule Affecting DeFi

The U.S. Senate is preparing to vote this week on a resolution to overturn a recent Internal Revenue Service (IRS) rule that has raised concerns within the cryptocurrency industry, particularly among decentralized finance (DeFi) projects. 

In December, the IRS broadened the definition of brokers who must report tax information, including DeFi projects. Now, a few senators are employing the Congressional Review Act (CRA) to reverse this rule, as well as another regulation from the Consumer Financial Protection Bureau (CFPB) regarding digital payment apps.

Senator Ted Cruz introduced a resolution to scrap the IRS rule, while Senator Pete Ricketts is leading the effort to undo the CFPB regulation. 

Majority Leader John Thune criticized the Biden administration for imposing strict financial regulations, arguing they could push crypto companies overseas. The Senate’s move follows the House Financial Services Committee’s decision last week to advance a similar resolution.

Cruz, a Texas Republican, accused the Biden administration of harming crypto innovation with last-minute regulations. He expressed confidence that Congress would vote to overturn the rule. Under the CRA, such reversals must happen within a limited timeframe based on legislative deadlines.

The CFPB rule aims to regulate large tech companies like Apple, Amazon, and Google, which offer digital wallets and payment apps. It would subject them to stricter financial oversight similar to big banks. Senator Ricketts argued that the rule unfairly expands government control and could hinder innovation in digital payments.

Both the IRS and CFPB regulations were finalized in the final days of President Joe Biden’s administration. Republicans have been intent on undoing these regulations, citing taxation and regulatory overreach concerns.

Meanwhile, the White House is planning a crypto summit on March 7, according to Trump’s crypto advisor, David Sacks. The event will bring together industry leaders, CEOs, and regulators to discuss the future of crypto regulation.