Senate to Vote on Nullifying IRS Broker Reporting Rule for DeFi Operators
The US Senate is gearing up for a final vote on March 27 to cancel out the Internal Revenue Service’s (IRS) broker reporting rule for DeFi operators, signaling a potential shift in regulatory oversight for the decentralized finance sector.
Resolution Timeline
- If approved, the resolution could reach President Donald Trump’s desk by March 28 for signing.
- The Senate previously passed the joint resolution with a bipartisan supermajority on March 4, with 292 lawmakers in favor and 132 against.
The broker reporting rule, established by the IRS in December 2023, sought to expand tax reporting requirements by redefining the classification of “brokers” to encompass digital asset platforms, including DeFi front-end interfaces.
Community Resistance
Introduced as part of the former President Joe Biden administration’s efforts to address tax loopholes associated with crypto transactions, the IRS rule has faced significant pushback from industry participants.
- Developers and advocates argue that DeFi infrastructure is ill-equipped to comply with stringent surveillance and reporting mandates.
- The Blockchain Association, the DeFi Education Fund, and the Texas Blockchain Council jointly filed a lawsuit challenging the rule, citing concerns over potential adverse effects on the US digital asset sector.
Marisa Coppel, head of legal at the Blockchain Association, criticized the IRS for overstepping its authority in expanding the definition of “broker” to include DeFi trading front-end providers, emphasizing that these interfaces do not facilitate transactions themselves.
Critics further highlight the decentralized nature of DeFi protocols, which lack centralized control or custodial authority over user funds, rendering the expanded broker rule ineffective.
If President Trump signs the resolution, the broker reporting rule would be officially repealed, effectively eliminating the expanded definition of brokers from IRS enforcement policies.
