The crypto sector pushes back against a new IRS rule extending the broker definition to DeFi platforms. Led by the Blockchain Association, 76 crypto companies urge Congress to reverse the rule, warning it could stifle innovation and impose excessive reporting requirements on blockchain firms.
The Blockchain Association wrote to important congressional officials, including Senate Majority Leader John Thune, Senate Minority Leader Chuck Schumer, House Speaker Mike Johnson, and House Minority Leader Hakeem Jeffries, on February 19. The letter asked them to help Senator Ted Cruz’s proposal to undo the rule, which was decided upon in the last days of the former government.
Leading letter signatories include Coinbase, Crypto.com, a16z Crypto, Aptos Labs, Kraken, Uniswap, and Grayscale. The sector contends that despite its distributed character, the IRS rule—which is scheduled to take effect in 2027—unjustly punishes DeFi platforms like traditional financial brokers.
Though these companies do not own or oversee consumer assets, the rule mandates DeFi platforms and software providers gather and report users’ personal and transactional data. Industry leaders say that this legislative approach is wrong and could push U.S.-based DeFi initiatives to close or move abroad, therefore compromising America’s position in financial technology.
The Blockchain Association characterized the regulation as an overreach that ignores the distributed character of DeFi. It cautioned that enforcing conventional brokerage rules on DeFi systems would impede technology development and provide an impractical compliance load.
Filed under the Congressional Review Act, Senator Cruz’s motion aims to stop the regulation before it is adopted. Should Congress accept the resolution, the rule would be void, and future reintroduction of such policies would be avoided.
Proponents of the repeal underline that the law disadvantages U.S.-based crypto companies, as international DeFi platforms catering to American consumers would not be subject to the same limitations. They contend that this disparity might discourage innovation from the United States and into more friendly legislative surroundings.
Other industry champions, including the DeFi Education Fund, outside the Blockchain Association have expressed their support of reversing the rule. They contend they are dedicated to making sure the regulation does not take effect since it is unconstitutional and unworkable.
As pro-crypto legislators become more powerful in Washington, the sector is still hoping Congress will give innovation top priority instead of tight rules. Still, the fate of the resolution is unknown given competing legislative concerns such as the federal budget vying for attention.
