Objection to DeFi ‘broker rule’ returns to focus
The Blockchain Association’s latest letter comes with a warning to Capitol Hill lawmakers
Blockchain Association CEO Kristin Smith | Permissionless III by Mike Lawrence for Blockworks
This is a segment from the Forward Guidance newsletter. To read full editions, subscribe.
The Blockchain Association has spoken again. Or, well, they’ve written another letter.
From the advocacy group that last month brought you a “consensus position” on market structure policy comes a warning to lawmakers on Capitol Hill.
The choices they have: act, or possibly “cripple DeFi innovation in this country altogether.”
If you don’t remember, there was a proposed rule — finalized under the Biden administration — that would expand the “broker” definition to include software that allows users to access DeFi protocols.
The Blockchain Association says this “inappropriately and unlawfully misclassifies technology infrastructure as intermediaries” — forcing software companies that never take custody of users’ assets to nonetheless collect (and report to the government) those users’ personal info and transaction details.
The Wednesday letter, addressed to Sens. John Thune and Chuck Schumer, as well as Reps. Mike Johnson and Hakeem Jeffries, calls for them to vote “yes” on Sen. Ted Cruz’s Congressional Review Act (CRA) resolution and repeal the so-called DeFi broker rule.
Blockchain Association’s Kristin Smith reminded us how long this battle goes back:
The IRS then sought to implement this new definition in 2023. The agency, in June 2024, applied the rule to centralized intermediaries — leaving out reporting requirements for decentralized or non-custodial brokers.
In December though, a second IRS rule sought to force tax reporting obligations onto crypto software providers that don’t act as intermediaries.
The effort by Cruz and Rep. Mike Carey to reverse it came two days after Trump’s inauguration.
Blockchain Association members are set to discuss the CRA resolution with Congressional offices in DC on Feb. 26, a group spokesperson said. It’s unclear when exactly a vote would take place.
The latest letter adds: “Policy decisions with such severe consequences should be made by Congress deliberately — not accidentally through ill-conceived midnight rulemaking.”
Get the news in your inbox. Explore Blockworks newsletters:
- The Breakdown: Decoding crypto and the markets. Daily.
- 0xResearch: Alpha in your inbox. Think like an analyst.
