The US Senate is preparing to hold a final vote on March 27 to nullify the IRS broker reporting rule for DeFi operators. The resolution could be sent to President Donald Trump’s desk as early as March 28 if approved. The vote follows a bipartisan supermajority passing the joint resolution on March 4, with 292 lawmakers in favor and 132 opposed. The broker rule, finalized by the IRS in December 2023, aimed to broaden tax reporting obligations by including digital asset platforms like DeFi front-end interfaces as “brokers.” This would require them to implement KYC standards, monitor user activity, and report transaction data to the IRS.
Since its introduction, the rule has faced significant industry opposition, with developers and advocates warning that DeFi infrastructure cannot feasibly comply with broker-level surveillance and reporting requirements. In December, a joint lawsuit was filed by the Blockchain Association, DeFi Education Fund, and the Texas Blockchain Council challenging the rulemaking, stating that it could potentially cripple the US digital asset sector. The Blockchain Association’s head of legal, Marisa Coppel, claimed that the Treasury exceeded its authority by expanding the definition of “broker” to include DeFi trading front-ends, which do not affect transactions. Critics have also pointed out that DeFi protocols lack centralized control or custodial authority over user funds, making the expansion of the broker rule essentially ineffective.
If President Trump signs the resolution, the rule will be repealed, removing the expanded definition of brokers from IRS enforcement policy. This move is seen as a significant victory for DeFi operators and the broader crypto community, who have been pushing back against the rule since its introduction. The IRS’s broker reporting rule was part of the Biden administration’s efforts to close tax gaps related to crypto transactions and increase visibility into blockchain-based financial activity. However, opponents argue that the rule would have had detrimental effects on the growth and innovation of the digital asset sector in the US.
Overall, the push to nullify the IRS broker reporting rule for DeFi operators reflects the ongoing regulatory challenges that the crypto industry faces. As the sector continues to grow and evolve, it is essential for policymakers to strike a balance between implementing necessary regulations to prevent illicit activities while also fostering innovation and growth. The resolution to repeal the broker rule highlights the vocal opposition from industry players and advocates who are committed to ensuring a regulatory environment that supports the continued development of decentralized finance and digital assets in the US.
