The U.S. Senate has voted 70-27 to overturn an Internal Revenue Service (IRS) rule that would have imposed new reporting requirements on decentralized finance (DeFi) brokers. This decision is seen as a significant move in favor of the cryptocurrency and digital asset industry.

Background of the IRS DeFi Broker Rule

The IRS DeFi broker rule, introduced in December, required DeFi platforms to report user data for tax compliance, thereby broadening the definition of “brokers” to include them. However, critics argued that this law was impractical, as decentralized platforms do not hold funds or keep customer data in the same manner as traditional financial institutions.

The digital asset think tank Coin Center referred to the proposal as “technologically unfeasible.” Senate Majority Leader John Thune (R-S.D.) stated,

“The Biden administration did everything it could to stifle financial innovation in the United States. The Senate is working to undo these burdensome regulations one at a time to restore financial freedom for the American people.”

Next Steps and Implications

The resolution must still pass the House of Representatives to be delivered to the President for final approval. If the rule becomes law, the IRS would be prohibited from enforcing the rule and enacting similar policies in the future.

Supporting the repeal, the Blockchain Association, which represents popular cryptocurrency companies like Coinbase, Kraken, and Uniswap Labs, said it will avoid needless limitations on DeFi innovation. According to the DeFi Education Fund, the Senate vote was the “first of many historic milestones in the regulation of digital assets in the United States.”

This vote echoes previous attempts to remove Securities and Exchange Commission accounting standards for digital assets and continues a trend of bipartisan crypto-related legislation. The Senate’s ruling might lay the stage for more extensive regulatory reforms, since stablecoin and cryptocurrency market structure legislation is anticipated to be on the legislative agenda.

Key Takeaways

• The U.S. Senate voted 70-27 to overturn the IRS DeFi broker rule, which would have imposed new reporting requirements on DeFi brokers.

• Critics argued that the law was impractical, as decentralized platforms do not hold funds or keep customer data in the same manner as traditional financial institutions.

• The resolution must still pass the House of Representatives to be delivered to the President for final approval.

• The Senate’s ruling might lay the stage for more extensive regulatory reforms in the cryptocurrency and digital asset industry.

For more news and updates on the cryptocurrency and digital asset industry, visit Global Crypto News.

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