US Congress liberalizes DeFi brokerage law

The U.S. Congress has repealed a controversial tax rule for DeFi brokers. The rule, dating back to the Biden era, required DeFi platforms to collect certain data on taxpaying Americans.

By an overwhelming majority of 292 to 132, delegates from both parties voted in favor of the Congressional Review Act, reversing regulations from the last days of the Biden administration.

"It is questionable whether this rule was ever enforceable," explained Republican Jason Smith, who has been a strong advocate for reform. "DeFi exchanges are not comparable to centralized crypto exchanges, traditional banks or brokers. They simply do not and cannot collect the user information needed to implement this rule."

Although Congress has now approved the bill, it must be approved a second time by the Senate. If President Trump signs it, the U.S. Internal Revenue Service (IRS) may not introduce similar regulations in the future.

However, not everyone is enthusiastic about the change in the law. Democrat Danny Davis warns of tax evasion and compares DeFi to traditional brokers:
"If you sell shares through a stock broker, they report the proceeds both to you and to the IRS," he explains. "It makes sense that taxpayers are more likely to report their income correctly if there are independent reports of their transactions."

According to his party colleague Lloyd Doggett, the measure could even contribute to the financing of terrorism and drug smuggling, which he said could increase the US national debt by as much as $4 billion.

The relaxation is part of a broader trend of more liberal crypto rules in the US. Since Donald Trump became president again, his administration has taken a clear pro-crypto course. Recently, he even signed an executive order to build a state reserve in Bitcoin.