Senate Vote on IRS DeFi Broker Reporting Rule

The US Senate is preparing to hold a final vote on March 27 to nullify the Internal Revenue Service’s (IRS) broker reporting rule for DeFi operators.

If approved, the resolution could be sent to President Donald Trump’s desk as early as March 28 for signing, according to Fox reporter Eleanor Terrett on March 25, citing three sources familiar with the matter.

The vote follows a procedural requirement after the Senate passed the same joint resolution in a bipartisan supermajority on March 4. 292 lawmakers voted to overturn the broker rule, while 132 opposed it.

The broker rule, finalized by the IRS in December 2023, aimed to broaden tax reporting obligations by redefining “brokers” to include digital asset platforms, including DeFi front-end interfaces.

Under this regulation, classified brokers would be responsible for implementing Know Your Customer (KYC) standards, monitoring user activity, and reporting transaction data to the IRS.

Community Pushback

The rule was introduced as part of the former President Joe Biden administration’s broader strategy to close tax gaps associated with crypto transactions and enhance visibility into blockchain-based financial activity.

Since its introduction, the IRS rule has faced industry opposition, with developers and advocates warning that DeFi infrastructure cannot feasibly comply with broker-level surveillance and reporting requirements.

In December, this led to a joint lawsuit by the Blockchain Association, the DeFi Education Fund, and the Texas Blockchain Council challenging the rule. The entities argued that the rule “risks crippling the US digital asset sector.”

Marisa Coppel, the Blockchain Association’s head of legal, stated that the Treasury has exceeded its statutory authority in expanding the definition of “broker” to include DeFi trading front-end providers, which do not affect transactions.

Critics emphasized that DeFi protocols lack centralized control or custodial authority over user funds, rendering the broker rule ineffective.

If Trump signs the resolution, the rule will be formally repealed, removing the expanded definition of brokers from IRS enforcement policy.