The cryptocurrency industry, especially brokers, has received major support from Texas Senator Ted Cruz this week. According to Axios reportCruz will use the Congressional Review Act (CRA) in the next few days to challenge the IRS’s current tax rule on reporting cryptocurrency income. The IRS reporting rule generated a lot of pushback from the cryptocurrency community, which led to the charges being filed.
The rule requires full reporting of income generated by cryptocurrencies and expands the definition of “intermediary,” which, according to critics, does not reflect the true nature of decentralization.
Cruz’s reported plan to Challenge this IRS rule It was met with enthusiasm from the cryptocurrency community and was seen by many as a principled stand against government intervention.
Critics say the IRS tax rule and definition of “middleman” stifle innovation
Senator Cruz’s latest move builds on the cryptocurrency community’s ongoing complaints about the IRS’s unfair cryptocurrency tax rules. Critics have criticized the agency’s use and definition of “intermediary” under the Administrative Procedure Act, which they see as arbitrary and too broad. This arbitrary definition and IRS overreach in the blockchain industry has been met with resistance from major players and companies in the crypto space.
In response, three groups, the DeFi Education Fund, the Blockchain Association, and the Texas Blockchain Council, have sued the agency over the changed rules.
The petitioners argued that the rule failed to appreciate the decentralized nature of Cryptocurrency And blockchain. They added that many cryptocurrency participants do not have access to the data requested by the agency.
Cruz to use CRA to challenge these IRS rules
Many see Senator Cruz’s plan to use the CRA as a welcome development and a signal of community rejection of government intervention. The CRA allows policymakers to block federal regulations by a simple majority in both chambers, which must be completed within 60 business days. According to the same Axios report, Cruz is confident that Al Qaeda will be challenged and crushed.
The plan has received a lot of support from Republican senators, including Sens. Cynthia Lummis of Wyoming, Tim Sheehy of Montana, and Bill Hagerty of Tennessee. Senator Lummis is a well-known supporter of Bitcoin and blockchain and introduced a bill last year recommending the creation of a Bitcoin stockpile.
Questionable reporting rule
The complaints and issues of the cryptocurrency community are based on the IRS special reporting rule in the 2021 infrastructure bill. According to the tax rule, cryptocurrency brokers must report their income from digital assets such as Bitcoin. For many cryptocurrency supporters, the rule effectively forced them to serve the state with money earned from innovation.
According to Ron Hammond of the Blockchain Association, the rule has become politically charged and has been a rallying point for many individuals. For Senator Cruz, the challenge represents his support for individual rights against government interference.
Featured image from Pexels, chart from TradingView
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