[Congressional Record Volume 171, Number 45 (Tuesday, March 11, 2025)]
[House]
[Pages H1099-H1102]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
PROVIDING FOR CONGRESSIONAL DISAPPROVAL OF THE RULE SUBMITTED BY THE
INTERNAL REVENUE SERVICE RELATING TO ``GROSS PROCEEDS REPORTING BY
BROKERS THAT REGULARLY PROVIDE SERVICES EFFECTUATING DIGITAL ASSET
SALES''
Mr. SMITH of Missouri. Mr. Speaker, pursuant to House Resolution 211,
I call up the joint resolution (H.J. Res. 25) providing for
congressional disapproval under chapter 8 of title 5, United States
Code, of the rule submitted by the Internal Revenue Service relating to
``Gross Proceeds Reporting by Brokers That Regularly Provide Services
Effectuating Digital Asset Sales'', and ask for its immediate
consideration in the House.
The Clerk read the title of the joint resolution.
The SPEAKER pro tempore. Pursuant to House Resolution 211, the joint
resolution is considered read.
The text of the joint resolution is as follows:
H.J. Res. 25
Resolved by the Senate and House of Representatives of the
United States of America in Congress assembled, That Congress
disapproves the rule submitted by the Internal Revenue
Service relating to ``Gross Proceeds Reporting by Brokers
That Regularly Provide Services Effectuating Digital Asset
Sales'' (89 Fed. Reg. 106928 (December 30, 2024)), and such
rule shall have no force or effect.
The SPEAKER pro tempore. The joint resolution shall be debatable for
1 hour equally divided and controlled by the chair and ranking member
of the Committee on Ways and Means or their respective designees.
The gentleman from Missouri (Mr. Smith) and the gentleman from
Illinois (Mr. Davis) each will control 30 minutes.
The Chair recognizes the gentleman from Missouri.
General Leave
Mr. SMITH of Missouri. Mr. Speaker, I ask unanimous consent that all
Members have 5 legislative days to revise and extend their remarks and
submit extraneous material on the bill under consideration.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Missouri?
There was no objection.
Mr. SMITH of Missouri. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise today in support of a Congressional Review Act
resolution repealing the last-minute, unfair, and unworkable Biden IRS
rule that places a bureaucratic burden on the Americans who own
cryptocurrency and the platforms that allow them to own it.
Congress gave the IRS clear instructions in the 2021 infrastructure
law regarding digital asset reporting. The IRS was given an inch and
took a mile, writing a rule that is overly broad and downright sloppy
in the process.
The rule subjects decentralized finance platforms, or DeFi exchanges,
to the same reporting requirements as a centralized bank or traditional
securities broker. Under President Biden, the IRS traded congressional
intent for a politically motivated mandate.
The Biden administration made no secret of its opposition to digital
assets and America's leadership in this booming industry. Bureaucrats
weaponized every tool in the toolbox, including finalizing this rule at
the eleventh hour, crippling the digital asset industry and threatening
American leadership and innovation in the process.
Approximately one in four Americans own cryptocurrency. This rule
puts a huge burden on these regular folks and could discourage
participation in the digital asset market altogether.
[[Page H1100]]
While workers lose, foreign countries win. Since only American
companies and taxpayers have to comply with the burdensome rules, only
American companies and taxpayers will need to spend billions of dollars
to change their business models and report billions of pieces of
taxpayer data.
America risks losing our edge to foreign companies as a result. The
rule disincentivizes the very innovation that has powered American
leadership in the digital asset industry. In a global economic
competition with China, this rule chips away at a source of American
economic strength.
There are real questions if the rule can even be administered. DeFi
exchanges are not the same as centralized crypto exchanges or
traditional banks or brokers. DeFi platforms do not and cannot even
collect the information from users needed to implement this rule. Their
software never controls the digital assets. DeFi platforms cannot
exchange currencies, hold assets in escrow, or maintain third-party
records of financial transactions like their counterparts, yet the
Biden administration wanted to treat them the same.
As former IRS Commissioner Rettig said himself, these new IRS crypto
regulations require millions of taxpayers to file new Form 1099s in a
way that would ``overwhelm the agency and have little or no value to
effective and efficient tax administration.''
The lesson here is simple: Laws passed by Congress should be
interpreted and implemented fairly, not used as a pretext to gain more
control over the economy at the expense of individual taxpayers.
The repeal of this misguided rule would remove a barrier preventing
American consumers from participating in crypto and help cement
America's digital asset leadership.
I thank my Ways and Means colleague, Congressman Mike Carey, for
leading the effort to protect taxpayers from an unjustified overreach
from the Biden administration.
Mr. Speaker, I urge my colleagues to support this bill, and I reserve
the balance of my time.
Mr. DAVIS of Illinois. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, back in 2021, when we passed the bipartisan
infrastructure law, Congress felt it was necessary to pay for what we
spent. That is a novel concept around here these days, I know. As part
of the offsets to that truly bipartisan bill, we made some changes
around tax reporting for the sale of cryptocurrency.
Under the tax system, taxpayers are required to pay tax when they
sell an asset, such as stocks or securities, at a gain. I know that
some of my colleagues on the other side of the aisle bristle at that
notion, but that is how our income tax works.
Nothing in the bipartisan infrastructure law changed anything about
the tax that cryptocurrency sellers owe. Instead, we created a
reporting requirement relating to the sales of these assets. When you
sell stock with a stockbroker, the broker reports the proceeds of the
sale to both you and the Internal Revenue Service.
{time} 1515
Probably to no one's surprise, when there is independent reporting on
these sales, taxpayers are more likely to report their income to the
Internal Revenue Service. It is simple human nature. When there is an
independent check on one's financial gain, taxpayers are more honest in
their reporting of that gain.
This resolution today would repeal some but not all of the Treasury
regulations by the Biden administration regarding the new reporting
requirements related to sales of cryptocurrency. Although
cryptocurrency is exchanged on both centralized and decentralized
platforms, the bill today only repeals the regulation related to
decentralized exchanges.
This inconsistent treatment of cryptocurrency exchanges leaves a
significant gap in this reporting system. If this CRA passes, while
redundant, taxpayers, who would rather avoid paying taxes on the gains
of their cryptocurrency sale, can now move to a decentralized exchange
knowing that the transaction would not be subject to reporting.
In fact, the Joint Committee on Taxation estimates that this bill
will cost the Federal Government $4 billion in tax revenue. That is,
this bill is expected to cause $4 billion in tax cheating. It is clear
to me that this bill weakens the Internal Revenue Service's ability to
detect and reduce cheating.
Further, I am deeply troubled by the potential of this bill to
bolster nefarious criminal activity. Decentralized exchanges are far
less regulated than other exchanges. They are known for being a method
of laundering the sales of fentanyl and human trafficking.
At the Rules Committee hearing yesterday, my colleagues on the other
side of the aisle suggested that nothing is stopping Congress from
coming back and modifying the rules to ensure tax compliance.
Unfortunately, given that my Republican colleagues have repeatedly
promoted tax cheating by the wealthy by their repeated efforts to cut
funding for IRS enforcement, this claim that they would take action to
ensure tax compliance in the deregulated crypto world rings hollow.
In short, this is an unpaid-for $4 billion giveaway to wealthy crypto
traders with the potential for side-effects that are much worse.
Mr. Speaker, for that reason, I do not support this joint resolution,
and I reserve the balance of my time.
Mr. SMITH of Missouri. Mr. Speaker, I yield such time as he may
consume to the gentleman from Ohio (Mr. Carey).
Mr. CAREY. Mr. Speaker, I thank Chairman Smith for his work on
bringing this legislation to the floor.
I also thank the staff of the Committee on Ways and Means for their
efforts in moving this very important legislation forward. This
commonsense, bipartisan resolution would overturn the IRS' Digital
Assets Sale and Exchanges Rule, otherwise known as the ``DeFi broker
rule.''
This legislation has broad bipartisan support. How do we know this?
Last week in the Senate, 51 Republicans were joined by 18 Democrats and
1 Independent who favored it.
The DeFi broker rule, which came out at the end of 2024, implements
stringent reporting requirements on decentralized finance exchanges, or
DeFi exchanges.
DeFi exchanges were subject to the same reporting requirements as
traditional brokers in centralized exchanges, despite the fact that
DeFi exchanges don't have the ability to collect any information that
the IRS requires from individuals using their platforms. This goes well
beyond the scope of the Infrastructure Investment and Jobs Act
instructions to the IRS and Treasury regarding establishing rules for
digital asset exchanges.
Through this ruling, the IRS effectively imposed consumer and
technology-related regulatory policies through the tax code in absence
of an explicit delegation of legislative authority.
The DeFi broker rule invades the privacy of tens of millions of
Americans, hinders the development of an important new industry in the
United States, and would overwhelm the IRS with over 8 billion new
information returns on Form 1099-DA. ``DA'' stands for ``digital
asset.''
To put this into perspective, this is more than double the amount of
information returns the IRS currently receives on all forms of 1099
combined. This rule would push American companies, jobs, and tax
revenue overseas into foreign countries because American cryptocurrency
owners would seek DeFi platforms outside of the United States.
It is essential that we pass this legislation today to avoid this
nightmare for the IRS and for the American taxpayers while ensuring
that the United States is in a position to lead the world in innovation
with the digital asset and cryptocurrency sector.
Mr. Speaker, that is why I am proud to have introduced H.J. Res. 25,
and I encourage my colleagues on both sides to vote ``yes'' on this
important legislation.
Mr. DAVIS of Illinois. Mr. Speaker, I yield such time as he may
consume to the gentleman from Texas (Mr. Doggett).
Mr. DOGGETT. Mr. Speaker, brokers who sell stocks and mutual funds
have long been required to file a report in January of each year on
Form 1099. They send it to their customers. They
[[Page H1101]]
send it to the Internal Revenue Service.
Many honest taxpayers out there right now have been collecting their
1099s from a bank or a securities broker to attach when they pay their
taxes. Well-established crypto exchanges, like Coinbase and Binance,
are required to do the same thing this year.
Why is it that Republicans are coming here today and saying: We want
these decentralized finance crypto exchanges to be exempt from what
everyone else in the financial service industry does?
The answer is two words. The answer is the same answer as to why it
is we are about to see a new spending bill approved tonight.
It is the same answer as to why Republicans are insistent on a
reconciliation bill that will add literally trillions of dollars to our
national debt as they boast about being fiscal conservatives who are
cutting healthcare in this country.
It is the same answer as to why Republicans cannot find their tongue
when Elon Musk goes rampaging through our civil service. The President
is responsible for dismissing more veterans than any President in the
history of the United States.
It is the same answer that exists when the same rampage is
undermining Social Security and the ability of the Social Security
system to pay those checks that have been the lifeline for so many
individuals who are seniors or individuals with disabilities.
The answer, in short, is: Donald Trump.
Shortly before he became President, Mr. Trump began raking in tens of
millions of dollars in fees by launching his own meme coin, and the
Trump family launched World Liberty Financial, which seeks to become a
future decentralized finance.
As usual, the Trumps don't want to play by the rules that apply to
mere commoners. King Trump, as he has described himself, plays by
different rules for the royalty. Of course, disclosure and transparency
are an absolute anathema to this administration, for whom lies are the
currency of the realm.
Getting a special interest exemption from a pesky 1099 disclosure
makes tax evasion and money laundering so much easier for the wealthy
Republican donors who have been using these decentralized exchanges.
This bill, designed to exempt crypto fraud, is consistent with the
sudden decision last week of Trump's SEC to halt prosecuting fraud
against a Chinese businessman who, just coincidentally, invested $75
million in the Trump family's World Liberty Financial. In this
administration, friends don't prosecute friends, or certainly not
friendly investors.
Despite President Trump's claim that he must launch a trade war and
impose a 25 percent tax on Americans who purchase anything from Canada
in order to stop the estimated fraction of 1 percent of the fentanyl
that enters our country from that longtime ally, today's bill opens the
door to rewarding drug traffickers in fentanyl, cocaine, and whatever,
as well as terrorists.
My colleagues need not take my word for it. We can turn to a
Republican, Senator Bill Cassidy of Louisiana, who said:
``Cryptocurrency has played an increasingly prominent role in the
global fentanyl trade . . . both in terms of . . . manufacturing and
trafficking of fentanyl and in laundering drug cartels' criminal
proceeds.''
He says: ``This is particularly true of so-called `decentralized'
crypto exchanges,'' for which this bill provides a totally unjustified
special treatment.
According to the nonpartisan FACT Coalition, cryptocurrency is
becoming attractive to hostile actors like Hamas, who seek ways to
sidestep sanctions. The risks are especially severe with decentralized
finance platforms, which are enabled to operate outside the traditional
regulatory oversight that applies to others.
I further note that, when we talk about fiscal responsibility, this
bill will add $4 billion to our national debt. Republicans can't even
question that. It is like the $8 billion in one of the gifts the
majority gave to the oil industry last week.
With $4 billion here, $8 billion there, and $4 trillion or so with
the Republican tax bill to provide more tax breaks to people like Elon
Musk and the people who were seated in the front row at the President's
inauguration, it adds up. Those Republicans who have been telling us
that we have a great national security problem with our national debt
are so concerned about it that they are going to add trillions of
dollars more, and $4 billion is nothing to ignore, which this bill does
and does not pay for.
We should reject this new Trump special interest legislation that
will just result in more corruption in this administration, a loophole
that would be exploited by wealthy tax cheats, drug traffickers, and
terrorist financiers, for which there is absolutely no reasonable
justification.
The SPEAKER pro tempore. Members are reminded to refrain from
engaging in personalities toward the President.
Mr. SMITH of Missouri. Mr. Speaker, I yield such time as he may
consume to the gentleman from Ohio (Mr. Miller).
Mr. MILLER of Ohio. Mr. Speaker, I thank Chairman Smith for yielding.
Mr. Speaker, the IRS' DeFi broker rule is a misguided and
overreaching attempt to impose financial reporting requirements, which
represents a fundamental misunderstanding of digital assets and its
underlying technology.
DeFi protocols are not brokers. They don't facilitate transactions
like traditional financial institutions, nor can they collect and
report user information. DeFi protocols provide infrastructure.
Expecting them to track and report user activity is both impractical
and misaligned with the core function of what they do. Yet, the IRS
wants to force software developers, validators, and even everyday users
into compliance with regulations that simply don't fit.
This is the equivalent of requiring the builders of our interstate
highways to report the identity of every driver who uses them. It is
unworkable, it is unfair, and it completely misses the mark.
This rule would drive U.S. blockchain innovation overseas, killing
jobs and stifling economic growth, while doing little to increase tax
compliance. Congress should lead in crafting clear, workable
regulations that protect consumers, ensuring that innovation isn't
stifled and compliance remains practical.
Mr. Speaker, I urge my colleagues to vote ``yes'' and do away with
this unworkable rule.
{time} 1530
Mr. DAVIS of Illinois. Mr. Speaker, I reserve the balance of my time.
Mr. SMITH of Missouri. Mr. Speaker, I yield such time as he may
consume to the gentleman from North Carolina (Mr. Moore).
Mr. MOORE of North Carolina. Mr. Speaker, I rise today in strong
support of H.J. Res. 25, which overturns the Biden administration's
misguided attempt to impose unworkable reporting requirements on the
digital asset industry.
In November, the American people sent a very clear message. They were
tired of the far-left policies of the Biden administration. They gave
President Trump a mandate to turn our country around.
Despite this clear mandate and warnings from committees, the Biden
administration pressed forward with partisan midnight rulemaking.
Last December, the Internal Revenue Service finalized a rule
requiring decentralized platforms to facilitate digital asset
transactions to report user data to the IRS.
While the Biden administration claimed this rule was about improving
tax compliance, in reality, it goes far beyond what Congress ever
intended.
This rule would place impossible burdens on software developers,
threaten American leadership in digital asset innovation, and
ultimately drive entrepreneurs and investors overseas.
We cannot continue the Biden-era policies that crush innovation and
put American companies at a disadvantage. That is why I support H.J.
Res. 25, which repeals this harmful IRS rule and allows Congress to
develop a targeted, commonsense framework that protects both consumer
privacy and American innovation.
This resolution is backed by over 117 industry leaders, including the
Blockchain Association, Coinbase, and the Crypto Council for
Innovation.
[[Page H1102]]
Empowering innovation, not stifling it, is key to keeping America
competitive.
Mr. Speaker, I urge my colleagues to stand with American
entrepreneurs and innovators by supporting H.J. Res. 25.
Mr. DAVIS of Illinois. Mr. Speaker, I yield myself the balance of my
time.
Mr. Speaker, I appreciate the heartfelt arguments from my colleagues
on the other side of the aisle, but at the end of the day, it is hard
for me to overcome the fact that this bill would add $4 billion to the
deficit solely due to taxpayer noncompliance.
If Republicans have a meaningful solution to address this
noncompliance, we look forward to working with them on it, but
embracing tax cheating by completely throwing these rules out is simply
not the answer.
Mr. Speaker, for that reason, I do not support this joint resolution,
and I yield back the balance of my time.
Mr. SMITH of Missouri. Mr. Speaker, I yield myself the balance of my
time.
Earlier this afternoon, the other Chamber was reminded that the
Constitution says all revenue measures must originate in the House of
Representatives.
The Senate must have been just so excited about this bipartisan CRA
that they couldn't wait another minute, but that is okay. Whether it is
the CRA or the budget, I guess they will just have to vote again.
Mr. Speaker, the repeal of the Biden IRS rule is a victory for common
sense. The Federal Government shouldn't demand decentralized finance
platforms, used by ordinary Americans to buy and sell cryptocurrency,
to fill out forms when those platforms don't collect the information
needed for the form. Neither the American people nor the IRS are
equipped to handle the demands of this unworkable rule.
These platforms are not like banks. They are not like security
brokers, yet this rule treats them as if they are.
In order to justify the burden placed on ordinary people, Mr.
Speaker, the Biden IRS stretched and twisted congressional intent to
enact regulations designed to cripple the digital asset industry.
I urge all of my colleagues to vote for this bill and help dismantle
the politically motivated regulations from the last administration.
Mr. Speaker, I yield back the balance of my time.
Ms. LOFGREN. Mr. Speaker, there are concerns with the IRS Final Rule,
in that it may exceed the scope provided for in the Infrastructure
Investment and Jobs Act. The rule also raises important issues that
warrant further scrutiny, including its potential impact on innovation
and privacy.
However, as the Congressional Review Act (CRA) would not only repeal
the current rule but also prohibits the agency from issuing any similar
regulation in the future without explicit congressional authorization,
I think a ``Yes'' vote goes too far. While I acknowledge flaws in the
current rule, I believe that additional study could be useful. It is
impossible that a more tailored rule aimed at appropriate tax
compliance in the digital assets space could be appropriate. At a
minimum, we should not completely forgo that possibility, without
further study.
For these reasons, I will be voting ``Present'' on H.J. Res 25.
The SPEAKER pro tempore. All time for debate has expired.
Pursuant to House Resolution 211, the previous question is ordered on
the joint resolution.
The question is on the engrossment and third reading of the joint
resolution.
The joint resolution was ordered to be engrossed and read a third
time, and was read the third time.
The SPEAKER pro tempore (Mr. Moore of North Carolina). The question
is on passage of the joint resolution.
The question was taken; and the Speaker pro tempore announced that
the ayes appeared to have it.
Mr. DAVIS of Illinois. Mr. Speaker, on that I demand the yeas and
nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further
proceedings on this question will be postponed.
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