- Senate votes 70-28 to repeal IRS DeFi broker rule, to Trump.
- The repeal aims to ease regulatory burdens on DeFi, encouraging innovation in the crypto industry.
- The repeal will create loopholes for tax evasion and illicit transactions, critics argue.
The U.S. Senate has sought to repeal a regulation that imposed reporting requirements on decentralized finance (DeFi) platforms. If signed into law, the repeal would remove a significant regulatory hurdle for the crypto industry.
Legislative Process and House Involvement
The Senate passed the resolution 70-28 on March 26 and sent it to former President Donald Trump to be signed into law. Steph is Crypto posted on X that the House of Representatives passed its version of the resolution on March 11.
The bill first passed the Senate in early March, but due to budgetary provisions in the constitution, the House introduced its version. After the House passed the revised measure, it was sent back to the Senate for approval. With Senate approval, the measure now awaits Trump’s signature, where his administration signaled that he prefers repealing the rule.
Industry and Political Reactions
The IRS DeFi broker rule attempted to apply existing tax reporting requirements to DeFi platforms, requiring them to report gross proceeds from cryptocurrency sales and transaction data.
The rule’s opponents argued that it placed unnecessary burdens on decentralized platforms and would discourage innovation in the crypto and DeFi sector. Blockchain Association CEO Kristin Smith supported the Senate’s move, calling for the permanent elimination of the rule.
Centrifuge general counsel Eli Cohen also opposed the rule as unimplementable. Democratic Rep. Lloyd Doggett voted against the resolution, though, and stated that the elimination of the rule would provide loopholes to be taken advantage of for tax evasion, money laundering, and illegal funding.
Next Steps and Possible Impact
If Trump signs the resolution, the rule will be officially reversed, eradicating the requirement that DeFi platforms report to the IRS. The action is expected to provide relief from regulation for DeFi sites, enabling them to be more agile in what they do.
The repeal can also guide future regulation of crypto in the U.S. by setting a precedent on how to regulate decentralized platforms. Policymakers and entrepreneurs are likely to continue to be concerned with how to balance regulating and innovating in the crypto space.
