White House Announces Support For CRA To Overturn IRS DeFi Broker Rule

The White House has publicly announced its support for a Congressional Review Act (CRA) resolution aimed at overturning the Internal Revenue Service’s (IRS) broker rule for decentralized finance (DeFi). The rule, finalized in 2024, expands the definition of a broker to include DeFi developers, requiring them to report user transaction data to the IRS.

White House and Lawmakers Oppose IRS Broker Rule

David Sacks, the White House’s Crypto and AI advisor, confirmed the administration’s backing of the CRA. He stated that the rule, introduced in the final months of the Biden administration, imposes strict reporting obligations on DeFi developers. The White House supports the repeal, emphasizing that the regulation places an unnecessary burden on software developers and infrastructure providers.

Senator Ted Cruz and Representative Mike Carey introduced the CRA resolution, seeking to nullify the IRS DeFi Broker Rule. The resolution requires a simple majority in both chambers of Congress to pass. Lawmakers argue that DeFi developers should not be classified as brokers under existing tax laws, as they do not directly facilitate transactions between buyers and sellers.

Critics of the rule believe it could discourage innovation in the digital asset space. Peter Van Valkenburgh, Executive Director of Coin Center, stated that enforcing broker-like reporting requirements on DeFi developers could hinder technological progress. The White House’s stance aligns with lawmakers who advocate for a regulatory approach that supports blockchain development.

Senate to Vote on CRA Resolution

The Senate is set to vote on the CRA resolution that seeks to repeal the IRS DeFi Broker Rule. The vote was initially scheduled for March 5, but potential delays due to the upcoming State of the Union address may push it back. If passed in both chambers, the resolution would overturn the IRS regulation.

Supporters of the CRA argue that the broker classification under the rule is too broad, as it includes software developers and platform operators who do not control user funds. They believe that imposing tax reporting requirements on DeFi developers will drive innovation outside the United States.

Technology experts warn that compliance with the rule could be impractical for decentralized platforms. This is because the platforms do not have a central authority managing user accounts. Many DeFi protocols operate through smart contracts, which do not have direct control over user funds or identity verification.

The White House’s support for the CRA suggests a shift toward a more innovation-friendly approach in digital asset regulation.

Meanwhile, most recently, ConsenSys filed with the U.S. SEC to challenge another DeFi-related regulatory proposal, reinforcing its stance against the expansion of “exchange” definitions to decentralized protocols. 

Future of Crypto Regulation in the U.S.

The outcome of the CRA resolution will serve as an early indicator of how the U.S. government will regulate digital assets. The White House’s support signals a willingness to work with pro-crypto lawmakers to establish regulations that foster growth while ensuring compliance with tax laws.

Lawmakers advocating for the resolution believe that repealing the IRS DeFi Broker Rule would reinforce the administration’s pro-crypto stance.

Moreover, the pro-crypto Congress has formed the Crypto Caucus to drive digital asset legislation, focusing on regulatory clarity and innovation. The caucus aims to fast-track stablecoin and market structure bills in line with Trump’s push for crypto-friendly policies. Lawmakers believe these efforts will strengthen the U.S.’s leadership in blockchain and financial technology.