The IRS's congressional review
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A Congressional Review action could soon move on the IRS's recently updated decentralized finance broker rule.
Why it matters: With strong backing from the crypto industry, passage of the Congressional Review Act resolution would be the latest example of Congress's newfound support for digital assets.
Driving the news: The Blockchain Association went out with a letter signed by 75 of its members yesterday urging congressional leadership to move Senate Joint Resoution 3 swiftly.
- Members of the association also plan to head to the hill on Feb. 26.
What they're saying: "The DeFi broker rule, finalized in the waning days of the Biden administration, represents regulatory overreach that fundamentally misunderstands the technology it attempts to regulate and ignores Congress's intent," the letter says.
Catch up quick: The IRS-revised definition of a "broker", which applies broker reporting requirements to DeFi, was published in the Federal Register on Dec. 30.
- It followed from the fight over the Biden administration's $1.2 trillion infrastructure legislation, which expanded the definition of a broker in order to raise more money to fund the measure.
- Sen. Ted Cruz (R-Texas) offered the CRA resolution (along with several others) to kill it shortly after the new Congress began.
How it works: The Congressional Review Act gives Congress a short window in which it can strike down an entire rule from the executive branch, by passing a resolution through both chambers.
- It also has to be signed by the president.
Flashback: Congress attempted to use congressional review to strike down SAB 121, the SEC's controversial rule for custody.
- The resolution passed both chambers, but it was vetoed by the president. (The new SEC later struck it down).
- It would have been tough to make the argument that the resolution passed within the required window.
- That said, Cruz's resolution is still within the window of 60 days, with some caveats that can extend it.
By the numbers: Cruz's resolution is up to 12 cosponsors as of this writing.
- It was discharged from the Senate Finance Committee by petition on Feb. 12.
Zoom out: In January, a trio of crypto advocacy groups sued over the rule in federal court, arguing that it fails to take into consideration the decentralized nature of the technology.
What we're watching: Multiple sources on the Hill tell Axios that action could happen on this next week, but — obviously — Washington has a lot on its plate lately.
