Crypto Industry Pushes Back
A broad coalition of crypto firms, led by the Blockchain Association, has sent a letter to Congressional leaders, urging support for Senator Cruz’s Congressional Review Act (CRA) resolution, S.J.Res. 3. The resolution aims to overturn the IRS rule, which industry leaders say misunderstands the decentralized nature of DeFi and creates impractical compliance burdens.
Among the signatories are some of the biggest names in crypto, including Coinbase, a16z, Paradigm, Kraken, Uniswap, and Anchorage Digital. The group warns that if the rule stands, U.S.-based DeFi companies will face higher regulatory hurdles than foreign competitors, putting the country at a global disadvantage.
Kristin Smith, CEO of the Blockchain Association, emphasized the urgency of blocking the rule:
"President Trump has made it clear that he supports crypto innovation. Now it’s up to Congress to ensure this technology can thrive in the U.S. Blocking this rule is critical to preventing it from resurfacing in the future."
The Legislative Battle
Senator Cruz’s resolution leverages the Congressional Review Act, a mechanism that allows Congress to overturn recently finalized federal regulations. If passed, not only would the IRS rule be nullified, but the agency would also be barred from introducing a similar regulation without Congressional approval.
The resolution needs a simple majority in both the Senate and the House before being sent to the President for final approval.
In the House, Representative Mike Carey has introduced a companion bill, arguing that the IRS lacks the resources to enforce such a broad rule:
"If implemented, this rule would flood the IRS with an unmanageable volume of digital asset reports—something even Biden’s own officials admitted could overwhelm the system."
What’s at Stake for DeFi?
Critics argue that applying traditional brokerage rules to DeFi platforms contradicts the very purpose of decentralized finance, which is built on peer-to-peer transactions without intermediaries.
If enforced, the rule would require DeFi developers and platforms to collect and report user information—a task that many say is technically impossible due to the permissionless nature of DeFi.
Opponents warn that these strict compliance demands could drive U.S.-based DeFi startups overseas, deter innovation in blockchain technology and jeopardize user privacy and financial freedom.
On the other hand, supporters of the IRS rule argue that DeFi transactions should not be exempt from tax regulations. They claim that the rule is necessary to prevent tax evasion and to create a level playing field between traditional and digital financial services.
A Defining Moment for Crypto Regulation
The debate over the DeFi broker rule highlights the broader struggle between crypto innovation and government oversight. As Congress prepares to vote on Senator Cruz’s resolution, the outcome could shape the future of digital asset regulation in the U.S.
If the resolution passes, it would be a major victory for the crypto industry, signaling Congress’s willingness to adopt a more innovation-friendly approach to regulation. If it fails, the IRS rule could set a precedent for stricter oversight of decentralized finance and blockchain technology.
Either way, the battle between crypto firms and regulators is far from over.
