Call for Elimination of DeFi Tax Policy

Nearly every major figure in the crypto industry has signed a letter urging Congress to remove a U.S. tax policy deemed harmful to decentralized finance (DeFi) technology.

The Internal Revenue Service (IRS) introduced a digital assets broker rule that imposes data collection and reporting requirements on DeFi brokers similar to those faced by securities brokers and exchanges. This rule was finalized shortly before President Trump’s administration took office.

The recently enacted rules can be nullified under the Congressional Review Act (CRA), and Senator Ted Cruz has proposed a resolution to eliminate them. The industries’ letter, spearheaded by the Blockchain Association and supported by companies such as Coinbase and Uniswap, asks Congress to endorse Cruz’s measure.

The letter argues that the DeFi broker rule represents regulatory overreach and does not align with Congress’s original intent. Additionally, the businesses contend that the rule imposes unfair burdens on U.S. firms, stifling innovation by giving foreign competitors an advantage.

Utilizing the CRA provides a straightforward way to reverse harmful regulations, but it comes with a caveat: any topic reversed under the CRA cannot be addressed similarly in the future.

While there is growing support for the resolution, Congress must achieve majority approval in both chambers before it can reach President Biden for signing.

The DeFi Education Fund also expressed support, emphasizing their commitment to reversing the “unworkable, unconstitutional” rule.

Read More: U.S. Treasury Issues Crypto Tax Regime For 2025, Delays Rules for Non-Custodians