Lawmakers are pushing back on a Biden administration rule redefining decentralized finance participants as “brokers,” warning it risks stifling U.S. cryptocurrency innovation and driving it overseas.
Biden’s Crypto Rule Sparks Backlash: Will It Push Blockchain Innovation Overseas?
U.S. Senator Ted Cruz (R-Texas) and Representative Mike Carey (R-Ohio) have introduced a joint resolution aimed at overturning a controversial rule from the Biden administration that critics say could harm the U.S. cryptocurrency industry, the two lawmakers announced on Jan. 22.
The rule, finalized by the Internal Revenue Service (IRS) on Dec. 30, 2024, redefines participants in decentralized finance (defi) as “brokers,” subjecting them to strict reporting requirements. Cruz and Carey argue this measure imposes excessive burdens on the digital asset industry, pushing innovation overseas. In announcing the resolution, Cruz stated:
The Biden administration’s rule attempts to drive American cryptocurrency innovation overseas. This regulation undermines the purpose of defi technology: to enable individuals to freely buy, sell, and exchange digital assets.
“America’s goal should be to prioritize innovation, and this rule is the opposite,” the senator added. “I call upon Congress to expeditiously take up this resolution, pass it, and send it to the President.”
Rep. Carey echoed this sentiment, describing the rule as “clear overreach from the IRS” and warning that its enforcement would overwhelm IRS resources with excessive new digital asset returns. He emphasized: “We are proud to work with Senator Cruz on this important effort to avoid needlessly complicating the tax-filing process.”
The resolution has garnered support from a coalition of lawmakers and industry groups. Senators Cynthia Lummis (R-Wyo.), Thom Tillis (R-N.C.), Tim Sheehy (R-Utah), and Ted Budd (R-N.C.) joined Cruz in introducing the measure in the Senate, while Carey led its introduction in the House. It is backed by organizations such as the Digital Chamber, Blockchain Association, Defi Education Fund, and various state blockchain councils, underscoring its importance to industry advocates. Proponents argue that overturning the rule will help protect the digital asset sector and foster innovation within the United States.
The joint resolution represents a critical effort to challenge regulatory overreach, with Cruz and Carey calling for swift congressional action. Whether the resolution will pass remains uncertain, but it highlights ongoing debates over balancing regulation with technological innovation in the cryptocurrency space.
