US Congress Moves to Overturn Controversial IRS DeFi Broker Rule

By: Eliza Bennet

The US Congress has taken a notable step in the realm of cryptocurrency regulation by voting to overturn a rule that has stirred considerable debate. The bipartisan vote by the House of Representatives aimed to nullify the Biden-era rule, often referred to as the "IRS DeFi broker rule," which sought to impose tax reporting requirements on decentralized finance (DeFi) protocols and platforms.

The decision came after the Senate had already passed a resolution to kill the rule. In the House, the motion to repeal was supported by a significant majority, with 292 votes cast in favor versus 132 against it. This move highlights a growing consensus that the proposed tax regulations were seen as technically unrealistic and potentially stifling to technological innovation in the burgeoning field of DeFi.

The contentious IRS rule would have expanded existing reporting requirements to encompass decentralized digital asset systems, which many argued was impractical given the decentralized nature of these platforms. Critics pointed out that the traditional concept of a broker does not apply to DeFi, where protocols operate without centralized intermediaries, thus rendering compliance with such reporting requirements unfeasible.

The vote was not strictly partisan, as 76 Democrats sided with the Republican majority to overturn the rule. This bipartisan cooperation reflects shared concerns about the regulatory framework potentially impeding growth and innovation within the crypto space. As the resolution moves forward, stakeholders in the cryptocurrency industry will be closely monitoring how these developments might shape future regulation.