DeFi Regulation Sees a Turning Point as U.S. Lawmakers Seek to Repeal IRS Broker Rule
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DeFi Regulation Sees a Turning Point as U.S. Lawmakers Seek to Repeal IRS Broker Rule
The upcoming vote is seen as a litmus test for Capitol Hill's evolving stance on crypto innovation.
Navigating Web3 tides with focused insightsSource: cryptoslate
Translation: Blockchain Knight
U.S. lawmakers are preparing a Congressional Review Act (CRA) resolution to challenge the Internal Revenue Service's (IRS) broker rule, which requires DeFi participants to report user data to the IRS.
Eleanor Terrett of Fox Business revealed on March 4 that Republican Senator Ted Cruz is leading efforts to introduce this CRA. An initial vote was originally scheduled for March 5 but may be delayed due to scheduling conflicts, including the upcoming State of the Union address.
According to Terrett, "If passed by simple majority in both the House and Senate, this CRA would overturn the Treasury Department’s IRS broker rule—an expansion of the definition of 'broker' to include DeFi developers. Supporters argue the current rule is ill-suited to the unique nature of DeFi."
The IRS broker rule was finalized last year, introducing new tax reporting requirements for entities handling digital assets.
The rule classifies brokers—including DeFi front-ends—as entities responsible for tracking user activity, reporting transactions, and implementing compliance measures. It also mandates that DeFi platforms implement Know-Your-Customer (KYC) procedures.
In addition, the regulation applies to all digital assets, including NFTs and stablecoins.
The White House supports this initiative, while David Sacks, the Crypto Assets Executive at the White House, issued a public statement on Tuesday calling the so-called DeFi broker rule "a last-minute attack by the Biden administration on the crypto community."
Peter Van Valkenburgh, executive director of crypto policy think tank Coin Center, criticized the rule for treating software developers and infrastructure providers as brokers.
He argued that enforcing such measures would harm privacy rights, ignore bipartisan concerns, and stifle technological innovation.
Given this, Van Valkenburgh emphasized that the outcome of this vote will serve as an early indicator of how the U.S. government approaches digital asset regulation in the years ahead.
"People have been talking about the new Congress taking a more crypto-friendly stance—this vote will be the definitive first test of that theory," he said.
Meanwhile, repealing the rule would align with the broader pro-crypto stance of the Donald Trump administration and reinforce the growing influence of pro-crypto lawmakers.
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