White House Backs Repeal of IRS DeFi Broker Rule to Support Crypto Innovation

Today David Sacks, appointed as the White House’s AI and crypto czar under President Donald Trump, announced the administration’s support for a Congressional Review Act resolution aimed at overturning a controversial IRS rule affecting decentralized finance platforms.

This resolution, introduced by Senator Ted Cruz and Representative Mike Carey, targets the IRS’s December 2024 “Broker DeFi Rule,” which expanded the definition of a “broker” to include software providers facilitating transactions on DeFi protocols. The rule mandated these providers to report digital asset transactions, raising concerns within the cryptocurrency community about privacy and regulatory overreach.

The IRS rule, finalized in the final days of the Biden administration, sought to impose reporting requirements on DeFi platforms, potentially classifying them as brokers if they exercised sufficient control over transactions. This move was perceived as an attempt to enhance tax compliance but drew immediate criticism from the crypto industry.

Critics argued it would create an unprecedented compliance burden for DeFi operators, many of whom operate without centralized control and do not traditionally collect user data. The rule was set to take effect in 2027, but its introduction sparked fears that it could drive innovation overseas and hinder the growth of American cryptocurrency businesses.

Understanding the Policy Shift

Sacks’ statement emphasized the Trump administration’s commitment to reversing what it described as an “11th hour attack on the crypto community” by the previous administration. The White House’s position is that the rule stifles American innovation and raises privacy concerns by requiring the sharing of taxpayers’ personal information.

In a post on social media, Sacks wrote:

The White House is pleased to announce its support for the CRA introduced by @SenTedCruz and @RepMikeCarey to rescind the so-called Broker DeFi Rule, an 11th hour attack on the crypto community by the Biden administration.

If passed by Congress and signed into law by Trump, the resolution would eliminate these requirements, aligning with the administration’s broader goal of fostering a pro-crypto regulatory environment. This support reflects Trump’s earlier pledges to position the United States as a leader in digital assets, including plans for a U.S. Crypto Reserve and a White House Crypto Summit scheduled for March 7, 2025.

The Senate’s bipartisan vote to repeal the rule, with significant support from both parties, including Minority Leader Chuck Schumer, indicates growing momentum for crypto-friendly policies in Washington, setting the stage for further debate and a potential final vote.