On March 4, 2025, the U.S. Senate introduced a resolution to repeal the Broker DeFi Rule, a regulation that required decentralized finance (DeFi) platforms to report user data to the IRS. The rule, which took effect on January 1, 2025, was adopted in the final days of President Biden’s administration and expanded the definition of “broker” to include DeFi platforms. Critics argue it misunderstands DeFi, burdens user privacy, and could drive innovation offshore. The current Trump administration, which supports pro-crypto policies, backs the repeal. The resolution has a strong chance of passing and could signify a shift toward a more innovation-friendly regulatory approach for DeFi in the U.S.
#1What is the Broker DeFi Rule?
The Broker DeFi Rule, formally called Gross Proceeds Reporting by Brokers that Regularly Provide Services Effectuating Digital Asset Sales, was adopted on December 30, 2024, during the final days of President Biden’s administration, and took effect on January 1, 2025. It expanded the definition of “broker” to include software platforms providing access to DeFi services, effectively forcing DeFi platforms to follow the same tax reporting rules as traditional financial brokers.
The rule required DeFi platforms to collect user identities (KYC), report gross proceeds from transactions, and submit detailed taxpayer information to the IRS—something that clashes directly with the decentralized nature of DeFi.
#2Why is the Rule Controversial?
The crypto industry has strongly opposed the Broker DeFi Rule from the beginning, arguing that it fundamentally misunderstands how DeFi works. Unlike traditional brokers who act as middlemen between buyers and sellers, DeFi platforms are merely software interfaces enabling peer-to-peer transactions. They do not control user funds or act as intermediaries.
Kristin Smith, CEO of the Blockchain Association, called the rule unconstitutional, claiming it violates the Administrative Procedure Act and oversteps the legal authority of both the IRS and the Treasury Department. In a joint statement, the Blockchain Association, DeFi Education Fund, and the Texas Blockchain Council warned that the rule threatens user privacy, creates crippling compliance burdens, and could force U.S.-based DeFi innovation offshore.
#3Political Response and Support for Repeal
The CRA resolution to rescind the rule was introduced by Senator Ted Cruz along with 13 co-sponsors. Voting on the repeal was originally scheduled for March 5, but could be delayed due to Senate scheduling conflicts.
David Sacks, the White House’s crypto advisor, publicly endorsed the CRA on social media platform X, calling the Broker DeFi Rule a “last-minute attack on the crypto community by the Biden administration.”
#4White House’s Changing Stance
The current Trump administration, which has taken a pro-crypto stance, strongly supports reversing the rule. The administration’s crypto-friendly position includes rejecting central bank digital currencies (CBDCs) and pledging tax relief for American crypto businesses. This makes the repeal of the Broker DeFi Rule a natural fit within its broader pro-innovation agenda.
During his 2024 presidential campaign, Donald Trump specifically promised regulatory relief for crypto companies, criticizing the Biden-era regulations as hostile to innovation and harmful to American competitiveness.
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