Crypto companies urge Congress to repeal IRS rule on DeFi brokers

Industry leaders warn that the new obligation will create serious privacy risks

20.02.2025 - 10:00

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2 min

What’s new? The Blockchain Association, which includes 75 companies, has called on Congress to repeal a new Internal Revenue Service (IRS) rule that classifies decentralized finance (DeFi) software as brokers. In a letter to lawmakers, crypto companies were urged to support Senator Ted Cruz’s resolution to overhaul Congressional legislation to repeal what they call the “anti-crypto innovation” rule.

The rule, finalized in the final days of the Biden administration, expands the definition of “broker” to include software providers facilitating access to DeFi protocols. The Blockchain Association argues that these requirements are excessive because they misclassify technology infrastructure as financial intermediaries. As a result, these organizations face strict reporting requirements.

What else is known? The letter states that the rule requires DeFi software vendors to collect and report extensive user data. This applies even to those who do not manage user assets. Industry leaders warn that this obligation will create serious privacy risks. Based on the agency's estimates, it would also increase the government’s paperwork burden by one-third.

The crypto companies that drafted the letter support Cruz’s resolution to prevent over-regulation. They believe it could protect US leadership in financial technology.

The letter gives an important role to the economic benefits of DeFi. It emphasizes its potential to create jobs, expand financial inclusion, and foster technological leadership. Industry supporters warned that without supportive regulations, the United States could lose its position as a global leader in digital assets.

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