Overview
The U.S. Senate is set to vote soon on potentially overturning an IRS rule that poses a significant threat to decentralized finance (DeFi) projects. Sources indicate that Senate leaders are prioritizing this legislation as it ties into broader digital asset regulations initiated during the Biden administration.
Key Details
- The contentious IRS rule, introduced last December, requires extensive tax disclosure from DeFi entities.
- Republican senators are advocating for the repeal of two recent federal regulations affecting digital assets: this IRS rule and a Consumer Financial Protection Bureau (CFPB) regulation involving digital payment systems.
- This initiative will utilize the Congressional Review Act, which allows Congress to nullify recent regulations.
Senator Ted Cruz has introduced a resolution aimed at annulling the IRS’s regulatory framework, while Senator Pete Ricketts supports similar action on the CFPB regulation, with both resolutions planned for a vote this week.
“The Biden administration did everything it could to stifle financial innovation in the United States, threatening to send digital asset companies overseas,” stated Majority Leader John Thune. “The Senate is working to undo these burdensome regulations one at a time to restore financial freedom for the American people.”
The House Financial Services Committee also advanced a corresponding IRS resolution, which must navigate both chambers of Congress and receive presidential approval to take effect.
The recent push to legislate against these IRS and CFPB rules comes amid rising concerns that extensive regulation could hinder innovation in the cryptocurrency sector, leading to further technological development overseas.
Quotes
“In a midnight move, the Biden administration issued their decentralized finance rule, which directly and immediately would harm American cryptocurrency innovation and drive development overseas,” said Cruz, affirming the urgency of Congressional action this week.
Additionally, the CFPB rule mandates stricter oversight of tech giants managing digital wallets, paralleling the regulations placed on traditional banking institutions.
“Following their election loss, the Biden-Harris CFPB rushed an eleventh-hour rule to attack non-bank digital consumer payment applications,” stated Senator Ricketts, calling for deregulation to foster innovation.
Upcoming Events: The White House is also preparing for a cryptocurrency summit scheduled for March 7, which will include industry leaders and regulatory figures driving the future of digital assets.
