Senator Ted Cruz plans to challenge IRS crypto tax rules

Texas Senator Ted Cruz is opposing new IRS crypto tax rules, which have been met with criticism from the crypto community. He plans to use the Congressional Review Act (CRA) to challenge a regulation that requires crypto brokers to report extensive income from digital assets. Critics believe this rule misinterprets the term "broker" and does not consider the decentralized nature of blockchain technology.

The IRS rule was part of the 2021 infrastructure bill, mandating that crypto brokers report earnings from cryptocurrencies like Bitcoin. Many in the crypto industry see this as government overreach that could hinder innovation. Cruz's initiative has gained support from other Republican senators, including Cynthia Lummis, Tim Sheehy, and Bill Hagerty. The CRA allows Congress to overturn federal regulations with a simple majority vote within 60 business days.

In addition to Cruz's efforts, various crypto advocacy groups, such as the DeFi Education Fund, the Blockchain Association, and the Texas Blockchain Council, have filed lawsuits against the IRS. They argue that the tax rule imposes unfair burdens on those in the decentralized crypto space.

Many crypto entities do not have the necessary data to comply with the IRS demands, making it nearly impossible for them to meet the requirements. They also criticize the IRS for using a vague and broad definition of "broker," which does not accurately reflect how blockchain functions.

Cruz's challenge highlights a growing resistance to government interference in the blockchain sector. For many in the crypto community, the IRS rule feels like an attempt to take away their earnings from innovation. Ron Hammond from the Blockchain Association noted that this issue has become a politically charged topic.