IRS Rollback: Congress’s Major Step to Advance Crypto
Key to understand:
President Donald Trump has affixed his signature to a piece of legislation enacted by Congress that nullifies an IRS rule released near the end of the Biden administration that could have significantly changed the landscape of DeFi.
One vote after the next, Congress eliminated the tax rules, frequently passing them on with substantial bipartisan margins.
This is the first pro-crypto bill ever to clear both chambers of Congress.
With President Donald Trump’s signature, the decentralized finance (DeFi) sector of the cryptocurrency community has been excused from the U.S. Internal Revenue Service’s (IRS) demand that it be regarded as a broker, and thus forced to monitor and report users’ activity.
An especially narrow IRS regulation adopted in the closing days of former President Joe Biden’s administration has now been formally repealed, Representative Mike Carey, an Ohio Republican, confirmed on Thursday. Barred from pursuing a similar course, the agency was compelled to rescind the tax regulation as Congress relied on the congressional review act to nullify it.
In his statement on Thursday, Carey pointed out that the so-called DeFi Broker Rule had erected a hurdle to American innovation, encroached upon the privacy of everyday Americans, and would have flooded the IRS with so many new filings that it could never handle them during tax season.
Although the motivation was slight, the victory marks the first time a pro-crypto legislation has cleared the U.S. Congress.
The votes stateside in the Senate and House of Representatives to overturn the IRS directive passed nearly unanimously, underscoring the strength of the crypto industry in this Congress. This could translate into better odds for the industry when it comes to other broader goals, such as the enactment of legislation that regulates stablecoin issuers and the creation of market rules for crypto trades.
After President Trump put his pen to the measure, the rule was formally disapproved and put aside, making the United States the first nation to pass crypto legislation—a DeFi history book in progress, the DeFi Education Fund wrote on its website Thursday.
That the DeFi tax matter is finally settled makes stablecoin legislation the next crypto challenge facing Congress. That bill has crossed the requisite committees in both chambers of each house and is currently awaiting floor votes in both chambers. The measures’ passing would set off a process whereby the two initiatives are merged into a unified compromise.
The president has set an August deadline for receiving the measure on his desk, and the sponsors of the legislation continue to insist that target remains attainable.