The United States Congress recently voted to eradicate the controversial decentralized decentralized finance (DEFI) broker rule, a major win for crypto. And on Thursday President Trump killed the proposal for good.
But let’s not fool ourselves – there is more pain to come.
In December 2024, the IRS suggested a broad rule Requires defi platforms To follow common crypto broker tax policies, including widely KYC users and other disclosure. The crypto industry pushed back immediately, with many blockchain groups that fit the IRS almost once the rule was announced.
Defi platforms are not designed to collect this type of information at first, and beyond there, opposed the proposed rule Defi’s main goal of protecting privacy while maintaining transparent of transactions.
Fortunately, this rule is likely to be able to scrape entirely beneath The administration Donald Trump After a 70-28 US Senate vote against the decision on March 26. It follows US House 292-132 vote on March 11 and the previous 70-27 Senate vote on March 4, both in favor of Repeating IRS Defi Broker Rule.
If the rule is stuck, it will hurt the US crypto industry and change just beyond the defi. As a crypto tax platform operator koinly, I know it will make compliance more expensive and complicated to us as well.
But it’s far from the surface.
This revocation is easy because the rule is so over-the-top that even most government officials have seen it as not working. But what happens when the IRS returns with a more subtle, carefully made rule that re -target Defi? Removal of this version does not prevent the agency again.
I wouldn’t be surprised if the IRS now continues to rent a Defi experts who helped here, especially after bringing many crypto specialists to the agency in February 2024.
IRS acts like there is still fate in unspecified crypto taxes
The IRS clearly believes that it is losing the crypto tax income and forcing it to expand as much as possible. The defi may be focused on privacy, but it still involves money, so it will not be ignored any time soon.
The IRS will not pick up this rule that is rejected simply. It will not be a stretch to assume that the agency will release its audits even more than crypto users to ensure their filing is accurate.
So, what should the US crypto industry do? It cannot be reactive. Instead of waiting for the IRS to overthrow another harsh crypto tax decision, it should be pushed even more difficult for the clarity of the defi regulation to prevent misinformation and oversepping policies from surfing.
The best time to push for fair IRS tax policies is now
While Crypto advocacy groups are Already doing a great job about itThe industry needs to be more persuasive especially in pushing for policies to distinguish real brokers from self-control of smart contracts, ensure fair tax treatment for Defi participants, and provide a clear reporting guide without the tedious change.
With Trump in the office and a more pro-crypto friendly environment in Washington, there is an opportunity to get regulations before pendulum swings back toward aggressive implementation.
This means that there is a four -year window to get it in shape.
While the crypto industry is active and interacting with Trump, it must ensure that these policies have been fully passed, clarified, and set by law. Otherwise, it may deal with a more difficult regulation of regulation under a future administration that is less friendly to decentralized technologies.
The IRS ‘defi broker rule should serve as a warning: until there is a heavy plot in the area, the regulators will continue to attempt to impose harsh policies with a technology they barely understand.
And next time, the crypto industry may not be lucky to have enough votes for a displacement.
