Congress Votes to Repeal IRS DeFi Broker Rule Amid Industry Concerns

The U.S. Congress voted to repeal the IRS's decentralized finance (DeFi) broker rule, a significant development for the crypto sector. President Trump finalized this repeal.

Key points:

The IRS proposed a rule in December 2024 requiring DeFi platforms to adhere to standard crypto broker tax regulations, including user KYC and disclosures.
This proposal faced immediate pushback from the crypto industry, with several lawsuits filed against the IRS.
The rule contradicted DeFi's aim of maintaining privacy while ensuring transaction transparency.
The Senate voted 70-28 against the rule on March 26, following a House vote of 292-132 in favor of repeal.
If implemented, the rule would have complicated compliance for the crypto industry, impacting innovation beyond just DeFi.
The IRS may attempt to introduce a revised rule targeting DeFi in the future.
The agency is expected to increase audits of U.S. crypto users to ensure accurate tax filings.
The crypto industry should proactively advocate for clear regulations distinguishing between true brokers and self-executing smart contracts.
There is a four-year window to establish favorable regulations under Trump's administration.

The IRS's attempt at imposing stringent rules highlights the need for a workable regulatory framework to prevent future overreach.