The U.S. Senate recently introduced the Congressional Review Act to overturn a controversial Biden-era regulation known as the Broker DeFi Rule. This rule mandated decentralized finance platforms to share user data with the IRS, sparking outrage within the crypto community.
The Broker DeFi Rule, also known as Gross Proceeds Reporting by Brokers that Regularly Provide Services Effectuating Digital Assets Sales, was seen as a threat to the privacy and innovation of the DeFi sector. Senator Ted Cruz and 13 cosponsors led the charge to rescind the rule, citing concerns about its impact on American DeFi companies.
Critics of the rule argued that it fundamentally misunderstood how decentralized finance operates. Instead of acting as intermediaries like traditional brokers, DeFi platforms serve as front-end services facilitating peer-to-peer transactions. The rule’s broad definition of “broker” raised constitutional concerns and posed a significant compliance burden on DeFi platforms.
The adoption of the Broker DeFi Rule in the final days of the Biden administration drew swift backlash from industry groups and activists. Many warned that the rule would drive DeFi projects offshore and stifle innovation in the crypto sector. The White House crypto advisor, David Sacks, expressed support for the Congressional Review Act, signaling a shift in the administration’s stance on crypto regulation.
The likelihood of the rule being rescinded is high, given the current administration’s pro-crypto stance and Trump’s promise of tax relief for crypto companies. The rule’s inconsistency with the government’s goal of preserving privacy in the cryptocurrency sector further supports its potential repeal.
In conclusion, the Congressional Review Act to overturn the Broker DeFi Rule represents a significant step towards protecting the privacy and innovation of the decentralized finance sector. With widespread support from industry leaders and policymakers, the future looks promising for DeFi platforms in the United States.