[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.

                          ____________________