76 crypto firms oppose IRS DeFi broker rule

The Blockchain Association, representing 76 cryptocurrency organisations, is urging Congress to support Senator Ted Cruz in repealing the IRS’s DeFi broker rule, arguing that it threatens U.S. crypto innovation and imposes excessive burdens on blockchain firms.

In a letter dated Feb. 19, the association called on Senate Majority Leader John Thune, Senate Minority Leader Chuck Schumer, House Speaker Mike Johnson, and House Minority Leader Hakeem Jeffries to repeal the regulation.

The rule, finalised near the end of the Biden administration, has drawn opposition from major crypto organisations, including 0x Labs, a16z Crypto, Crypto.com, and Grayscale.

The letter backs Senator Cruz’s Congressional Review Act resolution, S.J.Res. 3, which seeks to overturn a regulation that broadens the definition of a "broker" under U.S. law to include software providers facilitating access to DeFi protocols.

The IRS disclosed on Dec. 27, 2024, that the DeFi broker rules could impact up to 875 DeFi brokers in the U.S. if implemented in 2027.

The Blockchain Association argues that the rule could stifle American DeFi companies, weaken innovation, and reduce U.S. competitiveness in financial technology.

CEO Kristin Smith stated that while the group has launched a legal challenge against the rule, congressional repeal would be a faster solution.

The association also contends that the regulation unfairly targets domestic DeFi firms, potentially driving projects offshore.

It warns that the rule expands the definition of a “broker” to include software through which users interact with DeFi protocols, creating additional pressure on developers working in the space.