Crypto Industry Pushes Back Against DeFi Tax Rule

Nearly every major crypto company is urging Congress to repeal a controversial U.S. tax policy that they argue could harm decentralized finance (DeFi) innovation. The policy, introduced by the IRS, classifies DeFi platforms as brokers, forcing them to collect and report user data like traditional financial institutions.

Crypto Industry Opposes the Rule

Misunderstanding DeFi – Critics say regulators don’t grasp the technology and are trying to apply outdated rules to a decentralized system.
Unfair Burden on U.S. Companies – Foreign firms wouldn’t have to follow these rules, putting American businesses at a disadvantage.
Threat to Innovation – Overregulation could stifle DeFi’s growth and drive talent overseas.

Congress Can Reverse It

Senator Ted Cruz has introduced a Congressional Review Act (CRA) resolution to overturn the rule. The CRA allows Congress to nullify federal regulations, but once used, similar rules cannot be reintroduced in the future.

Crypto Industry Unites – A letter from industry leaders, including Coinbase, Kraken, and Uniswap, supports Cruz’s resolution.
Congressional Support Growing – With more pro-crypto lawmakers after the 2024 elections, there’s momentum to repeal the rule.
Potential Hurdles – The CRA requires majority approval in both chambers and a presidential sign-off.

Regulatory Uncertainty and Future Impacts

Past CRA Use – The tool was widely used during President Trump’s administration but can limit future regulation efforts.
SEC and Crypto Rules – A previous CRA attempt to overturn the SEC’s crypto accounting policy was vetoed by President Biden.
Industry Response – Groups like the DeFi Education Fund call the rule “unworkable” and pledge to fight its implementation.