What happened?
The US Senate recently voted 70–28 to approve a resolution that would overturn an IRS rule requiring DeFi platforms to report user activity. This decision was made under the Congressional Review Act (CRA), allowing Congress to nullify federal regulations within a specific timeframe after they are finalized. Once signed into law, this repeal will prevent the implementation of a controversial broker rule introduced by the IRS in December 2024.
Who does this affect?
This affects decentralized finance (DeFi) platforms and users, as well as the broader crypto industry. If implemented, the IRS rule would have classified certain DeFi platforms as brokers, subjecting them to complex customer reporting requirements akin to traditional financial institutions. The crypto community, particularly leaders and developers of DeFi platforms, argued against the rule, stating it was too vague and technically unworkable.
Why does this matter?
This decision has significant implications for the crypto market and U.S. digital asset policy. Repealing the broker rule is seen as a win for the crypto industry, potentially preventing innovation from being driven offshore due to regulatory burdens. It also reflects the current administration’s trend towards creating a more crypto-friendly regulatory environment, which could encourage further growth and investment in the sector.