US Senate Moves to Repeal Controversial IRS DeFi Broker Rule

Jimmy Aki
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On March 4, the US Senate passed a resolution with a 70-27 vote, aiming to repeal a controversial IRS rule that would require decentralized finance (DeFi) platforms to disclose extensive transaction data.

US Senate Votes to Repeal the IRS DeFi Broker Rule

The rule, which was part of the Biden administration’s effort to enforce stricter tax reporting, proposed that DeFi brokers report gross proceeds from crypto sales, including sensitive details about the taxpayers involved.

The intention behind the rule was to ensure more transparency in the crypto market and increase tax compliance.

However, the US Senate’s move to repeal this rule has highlighted growing concerns within the DeFi community about the feasibility and fairness of such requirements.

While the rule has yet to come into effect, its potential impact could have been profound, especially for decentralized exchanges.

Experts in the crypto industry have criticized the rule as “unworkable,” as many DeFi platforms do not operate under the same structures as traditional financial intermediaries.

According to Eli Cohen, the general counsel for Centrifuge, a tokenization platform, the rule “never made any sense and was unworkable in practice.”

He further stated, “It just means that the taxpayer needs to report directly to the IRS without an intermediary taking on this obligation.”

For proponents of decentralized finance, the repeal of this rule is seen as a victory. Kristin Smith, the CEO of the Blockchain Association, commented, “This is a big day for DeFi – and the US crypto industry.”

Moving Forward: The Road to Implementation

After passing the Senate, the resolution moves to the House of Representatives. There, it must be passed before reaching President Donald Trump’s desk for approval.

The Trump administration has signaled its support for repealing the rule, with David Sacks, the White House’s AI and crypto czar, confirming the President’s backing.

Trump has already taken steps to make cryptocurrency policy a national priority. On January 20, he signed an executive order emphasizing strategic engagement with the crypto industry.

According to Bloomberg, the directive instructs regulatory agencies to collaborate with the sector and establishes a dedicated crypto council to advocate for industry interests.

The ongoing efforts to repeal the IRS DeFi broker rule align with a broader trend in US regulatory policy, where lawmakers and industry leaders are advocating for a more favorable environment for crypto innovation.

This includes efforts to ensure that the US remains a leader in the emerging DeFi market, which is widely regarded as a strategic advantage in the financial sector.

The resolution passing through the Senate represents a critical turning point for both DeFi platforms and broader cryptocurrency regulation.

It is seen as part of a trend in which crypto advocates are successfully resisting overreaching regulations that could stifle innovation.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.