Legislation that would give Congressional disapproval of an IRS rule passed out of the House Ways and Means Committee last week.
House Joint Resolution 25 would “provide for Congressional disapproval… of the rule submitted by the IRS relating to “Gross Proceeds Reporting by Brokers that Regularly Provide Services Effectuating Digital Asset Sales.” The resolution would essentially reverse an IRS rule finalized in December 2024 that classified certain Decentralized Financial Platform (DeFi) participants as brokers. These platforms, or peer-to-peer networks, facilitate transactions among parties without taking custody of the transferred assets.
Starting this year, decentralized platforms are required to report digital asset sales on transactions occurring in 2025. However, when the rule was reported by the IRS, multiple digital asset associations, including Blockchain Association, challenged the rule claiming it was an “unconstitutional overreach.”
The regulations were intended to increase transparency and treat DeFi platforms like stockbrokers. Regulators feared that as cryptocurrency adoption becomes more widespread, the privacy of blockchain transactions enables tax evasion. Some officials estimate only 30 to 40 percent of those who purchase cryptocurrency report the gains to the IRS. The regulations were estimated to raise nearly $28 billion over 10 years.
The joint resolution, led by U.S. Sen. Ted Cruz (R-TX) and U.S. Rep. Mike Carey (R-OH) are an effort to strike down the increased reporting rules. Cruz has argued that the “regulation undermines the purpose of DeFi technology: to enable individuals to freely buy, sell, and exchange digital assets.” Carey said the regulation “represented clear overreach from the IRS” and would “result in a tidal wave of new digital asset returns, overwhelming IRS resources.”