Crypto Industry Urges Congress to Repeal IRS DeFi Broker Rule

Major players in the crypto industry, including Coinbase, a16z, and Kraken, signed a letter urging Congress to eliminate a U.S. tax policy impacting decentralized finance (DeFi). They argue this policy forces DeFi entities into regulatory frameworks meant for traditional brokers, imposing data collection and reporting requirements.

• The Internal Revenue Service implemented a digital assets broker rule just before the end of the Trump administration.
• Senator Ted Cruz introduced a resolution to repeal this rule under the Congressional Review Act (CRA).
• The industry letter claims the rule unfairly burdens U.S. firms compared to foreign competitors.
• Concerns were raised that this could stifle DeFi innovation in the U.S.
• A CRA resolution requires majority approval in both chambers of Congress before reaching the President.
• Momentum is building against the rule, with organizations like the DeFi Education Fund expressing support.

Critics warn that reversing regulations via CRA can complicate future regulatory efforts. The current congressional landscape includes more pro-crypto lawmakers post-2024 elections, but competing priorities may impact attention to this issue.