White House Backs Crypto: Senate to Vote on DeFi Rule Repeal

The White House has expressed support for the cancellation of a controversial Broker DeFi Rule adopted in December 2024. The rule, known as the Gross Proceeds Reporting by Brokers that Regularly Provide Services Effectuating Digital Assets Sales, required decentralized finance (DeFi) platforms to share user data with the Internal Revenue Service (IRS).

The rule, adopted in the final days of the Biden administration, was criticized for expanding the definition of "broker" to include software that provides access to DeFi platforms, effectively placing the DeFi sector under IRS oversight. This led to concerns about privacy and the imposition of compliance burdens on American DeFi companies.

The crypto industry has opposed the rule from the start, arguing that it misunderstands how DeFi operates. The rule assumes that DeFi platforms function as intermediaries, like traditional brokers, rather than front-end services facilitating peer-to-peer transactions. Kristin Smith of the Blockchain Association called the rule unconstitutional, stating that it violates the Administrative Procedure Act and exceeds the statutory authority of the IRS and the Treasury Department.

The White House's support for the cancellation of the rule comes as the U.S. Senate is set to vote on the Congressional Review Act (CRA) introduced by Sen. Ted Cruz and 13 cosponsors. The CRA aims to rescind the Broker DeFi Rule, which was adopted on December 30, 2024, and took effect on January 1, 2025. DeFi platforms were not expected to meet compliance obligations until 2027.

The White House's crypto advisor, David Sacks, voiced support for the CRA on X, stating that the rule was an "11th hour attack on the crypto community by the Biden administration." The announcement of the White House's support for the rule's cancellation was met with enthusiasm from activists, who warned that the rule posed an existential threat to the DeFi sector.

The probability of the rule being rescinded is high, given the current administration's pro-crypto stance and its goal of keeping the cryptocurrency sector private and free from government surveillance. During his presidential campaign in the summer of 2024, Trump promised tax relief for crypto companies from the US. The Broker DeFi Rule effectively pushes American DeFi platforms offshore due to the unlikely demand for collecting and sharing users' personal information