The US House of Representatives has moved significantly toward removing a tax rule that many feel unfairly targets decentralized finance (DeFi). Recently, the House Ways and Means Committee voted 26-16 to forward a resolution aimed at reversing the IRS’s new reporting rules for digital asset brokers.
Enforcing in 2027, the IRS regulation requires DeFi platforms and other crypto brokers to provide the agency comprehensive transaction data, including gross proceeds and user information. Critics contend that this need sets unreasonable expectations for DeFi platforms, which are not typically gathering such data.
Strong criticism was expressed by Miller Whitehouse-Levine, CEO of the DeFi Education Fund, who called the law a “unconstitutional overreach” compromising financial innovation. “We ask legislators to act quickly to safeguard Americans’ freedom to transact as they choose,” he said.
Should the resolution pass the whole House, it will proceed to the Senate before getting before the president for approval or veto. Chairman Jason Smith of the Ways and Means Committee attacked the rule, claiming that it was hurried through during the last days of the former government and might compromise American leadership in the field of digital assets.
“This rule is unworkable as well as unfair. DeFi brokers lack the knowledge needed to comply, Smith said.
Former IRS Commissioner Charles Rettig said before that these rules could result in an unmanageable administrative load and too much documentation the agency is not ready to handle. Critics also assert that the legislation unfairly favors overseas cryptocurrency companies free from the same reporting obligations.
Pro-crypto legislators see a chance to change the regulatory scene for digital assets with a Republican-owned House and Senate. The change in political leadership recently has already produced positive results in the industry, like the Securities and Exchange Commission (SEC) pulling various enforcement cases against cryptocurrency companies.
If this solution is successful, it could mark a significant shift in US bitcoin control, ensuring a more innovative environment and addressing taxation and compliance issues.
