Texas Senator Ted Cruz Challenges IRS Tax Rule on Crypto

Texas Senator Ted Cruz is preparing to challenge the IRS and their recent tax rules on crypto income reporting by utilizing the Congressional Review Act (CRA). The IRS’ reporting rule requires full reporting of income generated from cryptos and expands the “broker’ definition, which, according to critics, doesn’t reflect the true nature of decentralization.

Cryptocurrency Lobbying Groups Quick to Act

This was met with pushback from the crypto community, noting that such rules constitutes government overreach and threatens privacy in the decentralized finance ecosystem. 

Namely, the Blockchain Association, the DeFi Education Fund and the Texas Blockchain Council, three of cryptocurrency’s biggest lobbying groups, have sued the IRS for their reporting rule under complaint for Declaratory and Injunctive Relief last December 2024.

Texas Blockchain Council president Lee Bratcher stated that the rule fails to recognize the decentralized nature of this technology, where many actors simply do not have access to the information the IRS is now demanding.

The lawsuits allege that the reporting requirements are unconstitutional and stifle innovation.

Support for Senator Ted Cruz’s Challenge to the IRS

Senator Cruz is currently the Chair of the Commerce committee, and will introduce three resolutions to erase Biden moves on crypto, energy and internet access. He is confident that the three resolutions will pass. He expects the process to move “expeditiously.”

Senator Cruz’ confidence is backed up by a number of supporters that include Senator Cynthia Lummis (R-Wyo.), who chairs the new crypto subcommittee, and is a co-sponsor of the crypto resolution, along with Senator Bill Hagerty (R-Tenn.) and Senator Tim Sheehy (R-Mont.).

Senator Lummis is a well-known supporter of Bitcoin and the blockchain and filed a bill last year recommending the creation of a Bitcoin stockpile.

The CRA allows policymakers to stop federal regulations through a simple majority in both houses, which must be completed within 60 business days. Senator Cruz is confident the rule will be challenged and overruled.

What Happens If Senator Cruz Wins Against the IRS Ruling?

In the event that Senator Cruz successfully challenges the IRS ruling on crypto income reporting, the crypto community will continue to cultivate and innovate in their respective realm without the intrusion of the government.

This means that people who use cryptocurrency can continue reaping the benefits of decentralized finance software to buy, sell, and exchange digital assets directly with one another, without the need for expensive and unsecure third party intermediaries.

Such benefits include those who enjoy using their cryptocurrencies in crypto casinos and sports betting activities.