Ohio Republican House Representative Mike Carey will introduce a resolution to reverse a controversial IRS rule that the industry viewed as an attack on DeFi, at 3PM ET, Carey’s office told Unchained. 

The IRS broker rule, announced just before New Year’s, infuriated the crypto industry by expanding the definition of a “broker,” a label which requires extensive reporting to the IRS, to include DeFi developers. 

His resolution uses the Congressional Review Act, which gives Congress a mechanism to reverse federal agency rules, gives Congress until early March to reverse the broker rule. The text of the resolution is included below. 

Acknowledging Blockchain Technology Is Different

The IRS broker rule “fails to take into account the nature of blockchain itself and distributed systems more generally,” explained Ledger Vice President of Global Policy Seth Hertlein. “It forces centralization where it doesn’t exist and doesn’t need to be in such a way that it sort of defeats the purpose of decentralized networks to begin with.”

Texas Republican Senator Ted Cruz is also expected to announce three resolutions later today, as first reported by Axios last week, targeting the IRS broker rule as well as rules on energy and internet access enacted in the final days of Biden’s presidency. Carey’s resolution, however, will just target the IRS broker rule. 

A Debate Over How to Tax DeFi

The Department of the Treasury framed the broker rule as a way to ensure tax revenue owed to the government is collected from both DeFi projects and centralized companies. The rule was first proposed in August 2023. Carey wrote a letter to the Treasury critiquing the rule on December 6. 

But DeFi advocates argued, months before the rule was formally introduced, that compliance would be so arduous that it would push DeFi development offshore. 

Three industry groups (Blockchain Association, DeFi Education Fund, and the Texas Blockchain Council) sued the IRS after the bill was formally introduced on December 27. 

A resolution must pass through both houses of Congress by majority vote. By having resolutions introduced in both the House and Senate, it is much more likely that the CRA will work to repeal the broker rule by deadline. 

Click here to read the full Resolution text.