Today, Ways and Means Committee Chairman Jason Smith (MO-08) delivered the following remarks during floor debate on H.J.Res 25, a Congressional Review Act resolution disapproving of a Biden DeFi Broker IRS rule.
As prepared for delivery.
“I rise today in strong 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, ambiguous, and downright sloppy in the process. The rule subjects decentralized finance platforms – or “DeFi” exchanges – to the same reporting requirement 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 11th hour, crippling the digital asset industry and threatening American leadership and innovation in the process. Approximately 1 in 4 Americans own cryptocurrency. This rule puts a huge burden on these regular folks and could discourage participation in the digital asset market altogether.
“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, quote, 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 want to thank my Ways and Means colleague Congressman Mike Carey for leading the effort to protect taxpayers from an unjustified overreach from the IRS. I urge my colleagues to support this bill.”