What is S.J.Res.3?
S.J.Res.3 is a joint resolution introduced by Sen. Cruz (R-TX) and Rep. Mike Carey (R-OH). The resolution provides for congressional disapproval under chapter 8 of title 5, (5 U.S.C. § 8) of the rule submitted by the Internal Revenue Service (IRS) relating to “Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales”. The rule was finalized December 30th, 2024.
Why does 5 U.S.C. § 8 Matter?
- This harmful rule/regulation broadens the definition of a “broker” to encompass operators of custodial digital asset trading platforms, certain providers of hosted digital asset wallets, processors handling digital asset payments, and individuals who act as vendors in transactions with customers.
- This would include owners of digital asset kiosks, brokers accepting digital assets as commission payments, brokers dealing in digital assets, and issuers of digital assets who regularly offer redemption services for those assets.
- This rule also defines decentralized financial (DeFi) participants as “brokers,” subjecting them to stringent and overly burdensome requirements that DeFi technology does not have the technical capability to meet.
- In adopting this standard, the Treasury Department and IRS rejected numerous comments from the public that various types of trading front-end service providers do not have sufficient visibility to be able to know the nature of these transactions.
This rule undermines the purpose of DeFi technology: to allow individuals to freely buy, sell, and exchange digital assets.
The Digital Chamber encourages regulators and lawmakers to support market freedom for the buying and selling of digital assets, as well as simplicity and privacy in rulemakings for their tax-filing process.