US Senate May Repeal Broker DeFi Rule: What Does It Mean?

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by Giorgi Kostiuk

2 years ago

The US Senate is considering the repeal of a rule requiring DeFi platforms to share user data with the IRS. What is this rule about, and why is it controversial?

History and Concept of the Broker DeFi Rule

On March 4, the US Senate released a Congressional Review Act to rescind the 'Broker DeFi Rule' established during the Biden administration. This rule mandates DeFi platforms to share user data with the IRS. Crafted by Sen. Ted Cruz and 13 co-sponsors, the rule awaits voting, initially set for March 5 but subject to delays.

This rule expands the term 'broker' to include software providing access to DeFi platforms.

Criticism and Issues with the Rule

Critics argue that the rule misunderstands DeFi platforms, treating them as intermediaries. Kristin Smith of the Blockchain Association deems the rule unconstitutional, fearing it could force businesses offshore.

Such a decision threatens innovation and economic growth.

Prospects of Repealing the Rule

The rule's repeal seems likely given the Trump administration's pro-crypto stance. Trump's support for crypto tax relief is at odds with the Broker DeFi Rule. Moreover, Trump has expressed willingness to abolish the IRS.

Repealing the Broker DeFi Rule could be essential to supporting the US crypto industry by ensuring privacy and favorable growth conditions.

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