Crypto Industry Unites to Repeal IRS Rule Impacting DeFi

Industry Coalition Pushes Back Against DeFi Broker Rule

A coalition of 75 cryptocurrency companies, led by the Blockchain Association, has called on Congress to repeal a contentious IRS rule aimed at DeFi brokers. The rule, introduced during the holiday season, imposes information-reporting requirements similar to those faced by traditional securities brokers and exchanges.

Key Arguments Against the Rule

The coalition, which includes major players like Coinbase, a16z, and Uniswap, argues that the rule misunderstands DeFi technology and disregards Congress's original intent. It also highlights that the regulation unfairly burdens U.S. companies while not applying to foreign firms serving American customers, potentially harming domestic innovation.

Congressional Review Act (CRA) Resolution

Senator Ted Cruz introduced a resolution under the CRA to overturn the rule. The CRA allows Congress to reverse recently enacted regulations, but it comes with the limitation that any repealed rule cannot be reintroduced in a similar form. The industry letter supports Cruz's resolution as a definitive path to roll back the rule before it takes effect.

Challenges and Opportunities

For the CRA resolution to succeed, it needs majority approval in both chambers of Congress and the President's signature. With the 2024 elections expected to bring more crypto-friendly lawmakers to Capitol Hill, the industry sees a potential window of opportunity, despite competing legislative priorities like the federal budget.

Broader Industry Support

Other crypto organizations, such as the DeFi Education Fund, have also expressed strong opposition to the rule, calling it "unworkable" and "unconstitutional." These groups are committed to preventing its implementation, further amplifying the industry's collective voice in this regulatory battle.

The crypto industry's united effort reflects its determination to protect DeFi innovation and ensure fair regulatory treatment. The outcome of this debate could significantly shape the future of decentralized finance in the U.S.