The US Senate is gearing up for a crucial final vote on March 27 to overturn the Internal Revenue Service’s (IRS) broker reporting rule for DeFi operators. This resolution, if approved, could be swiftly presented to President Donald Trump for signing as early as March 28, as reported by Fox journalist Eleanor Terrett on March 25, citing sources familiar with the situation.
This impending vote comes after the Senate previously passed the joint resolution with a bipartisan supermajority on March 4. A total of 292 lawmakers voted in favor of nullifying the broker rule, while 132 opposed it.
The broker rule, which was established by the IRS in December 2023, aimed to expand tax reporting requirements by redefining “brokers” to include digital asset platforms, such as DeFi front-end interfaces. Under this regulation, entities classified as brokers would be tasked with implementing Know Your Customer (KYC) standards, monitoring user activity, and reporting transaction data to the IRS.
However, since its inception, the IRS rule has faced significant opposition from industry players, with developers and advocates arguing that DeFi infrastructure would struggle to comply with the stringent surveillance and reporting demands of broker-level regulations.
In response to this, a joint lawsuit was filed in December by the Blockchain Association, the DeFi Education Fund, and the Texas Blockchain Council to challenge the rule. The entities expressed concerns that the rule could potentially stifle innovation within the US digital asset sector.
Marisa Coppel, the head of legal at the Blockchain Association, criticized the IRS for overstepping its statutory authority by expanding the definition of “broker” to include providers of DeFi trading front-ends. She emphasized that these interfaces do not have any impact on transactions and should not be subject to the same regulations as traditional brokers.
Critics have also pointed out that DeFi protocols operate without centralized control or custodial authority over user funds, making the extension of the broker rule impractical and ineffective.
If President Trump signs the resolution, the broker rule will be officially repealed, eliminating the expanded definition of brokers from IRS enforcement policies.
This development marks a significant victory for the DeFi community and could pave the way for more tailored regulations that better suit the decentralized nature of these platforms.