US Senate Introduces Congressional Review Act to Repeal Broker DeFi Rule

The US Senate has introduced the Congressional Review Act (CRA) to rescind the Broker DeFi Rule, a Biden-era regulation that required decentralized finance platforms to share user data with the Internal Revenue Service (IRS).

Background on the Broker DeFi Rule

The Broker DeFi Rule, also known as Gross Proceeds Reporting by Brokers that Regularly Provide Services Effectuating Digital Assets Sales, was created by Sen. Ted Cruz and 13 cosponsors. The rule expanded the definition of “broker” to include software that provides access to decentralized finance platforms, effectively placing the DeFi sector under IRS oversight.

The rule was adopted on December 30, 2024, and took effect on January 1, 2025. However, DeFi platforms were not expected to meet compliance obligations until 2027. The rule imposed several requirements on DeFi platforms, including:

  • Subjecting users to Know Your Customer policies
  • Reporting gross proceeds from transactions and other actions on the platforms
  • Sharing involved taxpayers’ details with the IRS

Criticism of the Broker DeFi Rule

The crypto industry has opposed the Broker DeFi Rule from the start, arguing that it misunderstands how decentralized finance operates. The rule assumes that DeFi platforms function as intermediaries, like traditional brokers, rather than front-end services facilitating peer-to-peer transactions.

Experts have also raised concerns about the rule’s impact on innovation and economic growth. David Sacks, the White House crypto advisor, voiced support for the CRA, stating that it would foster innovation and economic growth rather than stifle it.

Probability of the Rule Being Rescinded

The Broker DeFi Rule does not align with the current administration’s pro-crypto stance. Given that the Trump administration has explicitly banned the development of central bank digital currencies, a vote to repeal the rule would be consistent with its policy direction.

Additionally, during his presidential campaign in the summer of 2024, Trump promised tax relief for crypto companies from the US. Considering these facts, the rule has a great chance of being rescinded.

What’s Next?

The voting on the CRA is scheduled to take place soon. If passed, the CRA would effectively repeal the Broker DeFi Rule and remove the compliance burden imposed on American DeFi companies.

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