US House of Representatives Pushes to Abolish IRS Cryptocurrency Tax Regulations

The US House of Representatives is reviewing plans to abolish the Internal Revenue Service (IRS) cryptocurrency tax regulations. These regulations require decentralized finance (DeFi) platforms to comply with transaction reporting obligations similar to those of stock brokers.

According to Decrypt on the 26th (local time), Republican Senator Ted Cruz and Representative Mike Carey are pursuing a resolution to repeal the IRS's cryptocurrency tax regulations using the Congressional Review Act (CRA). The CRA is legislation that allows Congress to review and nullify government agency regulations through a joint resolution.

The IRS maintains that cryptocurrency transactions should be subject to the same reporting standards as existing financial assets for equity considerations. However, Republican lawmakers are opposing this, arguing that the government is attempting to implement excessive regulations beyond Congress's legislative intent. They particularly argue that imposing the same reporting obligations on DeFi platforms and decentralized financial services as traditional financial institutions will negatively impact industry growth.

On the other hand, there are concerns that if these regulations are abolished, the IRS's ability to monitor cryptocurrency transactions will be weakened, potentially leading to increased tax evasion. While the IRS has delayed implementation to gather industry feedback, the House's current movement increases the possibility of the regulations being withdrawn entirely.