New Legislation Overturns Controversial DeFi Broker Rule
The US House of Representatives recently voted to overturn the controversial DeFi broker rule put in place by the IRS during President Joe Biden’s administration.
Strong Support for Repeal
- 292 lawmakers voted in favor of overturning the rule.
- 132 lawmakers opposed the measure.
- Despite initial resistance, 76 Democrats joined Republicans in supporting the repeal.
Last year, the IRS implemented the broker rule, which required digital asset operators, including DeFi front-end operators, to adhere to strict tax reporting regulations. This included enforcing KYC measures, tracking user activity, reporting transactions, and ensuring compliance.
Critics of the Rule
- DeFi platforms do not have access to user funds or personal data, making compliance with the rule impractical.
- House Ways and Means Committee Chairman Jason Smith criticized the rule, stating that DeFi platforms operate differently from traditional financial institutions and cannot collect the necessary user information.
- Smith highlighted the burden the new regulations would place on taxpayers and the IRS.
The Senate also voted to overturn the provision on March 4, aligning both chambers on the issue. The resolution now awaits final approval from the Senate before reaching President Donald Trump’s desk.
Positive Response from the Crypto Community
Leaders in the crypto community have praised the decision to repeal the DeFi broker rule, citing it as a significant victory for the industry.
Community Leaders’ Reactions
- Jake Chervinsky, Chief Legal Officer at Variant Fund, emphasized the bipartisan support for the repeal and its implications for the future of crypto legislation.
- Coinbase’s Chief Policy Officer, Faryar Shirzad, hailed the bipartisan vote as a milestone for the industry and called for further legislative action.
- DeFi Education Fund CEO Miller Whitehouse-Levine commended the bipartisan House members for recognizing the flaws in the IRS and Treasury’s broker rule.
The decision to overturn the DeFi broker rule has been met with widespread support and is seen as a step towards fostering innovation in the US.
