DeFi Platforms Get Tax Relief From the US Senate
DeFi platforms breathed a sigh of relief this month as the U.S. Senate voted 70-28 to repeal an Internal Revenue Service (IRS) rule that would have imposed broker-like tax reporting requirements. This rule, finalized in December 2024, sought to classify certain DeFi service providers as brokers, obliging them to collect user information and report transactions to the IRS starting in 2027.
Critics, including industry stakeholders and lawmakers, argued that this regulation was impractical for DeFi platforms, which operate through decentralized, self-executing smart contracts without centralized control to gather user data. They contended that the compliance costs would be prohibitive and that the rule could hinder innovation within the crypto sector.
The repeal process utilized the Congressional Review Act, allowing Congress to overturn federal regulations with a simple majority vote. Following the Senate's approval, the resolution moved to the House of Representatives, which passed it with bipartisan support. The measure now awaits President Donald Trump's signature, which is anticipated, as he has expressed support for the repeal.
This legislative action is viewed as a significant victory for the crypto industry, alleviating concerns about stringent reporting requirements and preserving the operational flexibility of DeFi platforms. However, it also raises questions about tax compliance and the potential for tax evasion within the rapidly evolving digital asset space.
