Senate Repeals Biden-Era IRS DeFi Broker Rule, Bill Heads to President

In a significant move for the cryptocurrency industry, the U.S. Senate has voted to repeal the Biden-era IRS DeFi broker rule, marking a major victory for decentralized finance (DeFi) advocates. The bill now heads to President Biden, who must decide whether to sign or veto the measure.

What Was the IRS DeFi Broker Rule?

The controversial rule, introduced as part of the 2021 Infrastructure Investment and Jobs Act, sought to expand the definition of “broker” to include decentralized finance platforms, crypto miners, validators, and developers. The regulation aimed to increase tax compliance by requiring these entities to report user transactions to the IRS, similar to traditional financial institutions.

However, critics argued that the rule was overly broad and impractical, as many DeFi platforms operate without centralized control, making compliance nearly impossible. Industry leaders warned that enforcing such regulations could stifle innovation, drive blockchain startups offshore, and hinder the growth of DeFi in the U.S.

Senate Votes for Repeal

In a bipartisan effort, the Senate voted to repeal the broker rule, following a similar decision by the House of Representatives earlier this year. Lawmakers who supported the repeal emphasized that the rule placed undue burdens on the crypto industry and could have unintended consequences for developers and individual users.

Senator [Name], a strong advocate for blockchain innovation, stated:
“The IRS rule was an overreach that threatened to suffocate the DeFi ecosystem. We need regulations that promote transparency and compliance without undermining technological progress.”

What’s Next? Biden’s Decision Looms

With both chambers of Congress approving the repeal, the bill now lands on President Biden’s desk. While the administration initially backed the rule as part of its broader tax enforcement strategy, growing bipartisan opposition could pressure the president to reconsider.

If Biden signs the repeal, it would be a win for the crypto industry and signal a more balanced approach to digital asset regulation. However, if he vetoes it, Congress would need to muster enough votes to override the decision.

A Pivotal Moment for Crypto Regulation

The repeal of the IRS DeFi broker rule highlights the ongoing battle between regulatory oversight and financial innovation. As the crypto industry continues to evolve, lawmakers and regulators must strike a balance between preventing illicit activity and fostering a thriving digital economy.

For now, all eyes are on President Biden as the crypto community awaits his final decision.