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- Congress is pushing back against the IRS’ DeFi tax rules, citing concerns over regulatory overreach and innovation risks.
- If overturned, the move could reshape DeFi taxation, benefiting platforms like Uniswap and broader crypto adoption.
Following the U.S. House Ways and Means Committee’s 26-16 vote, a resolution has been advanced to overturn the Internal Revenue Service’s (IRS) controversial tax reporting requirements for decentralized finance (DeFi) platforms.
In late 2024, the U.S. Department of the Treasury classified DeFi platforms as traditional brokers, imposing new obligations requiring them to store and report user transaction data similarly to market brokers, according to a Crypto News Flash update.
IRS Rule and Congressional Response
This initiative, led by Representative Mike Carey (R-Ohio), seeks to nullify the IRS rule established in December 2024, which mandates that DeFi platforms adhere to broker-like reporting standards. The contested IRS regulation requires DeFi platforms to report gross proceeds from digital asset sales, similar to traditional financial brokers.
Critics argue that this rule imposes undue burdens on decentralized platforms and could stifle innovation within the crypto industry. The regulation, finalized on December 30, 2024, is slated for implementation in 2027.
Congressional Pushback
According to a press release, the IRS claims that these regulations will simplify tax filing for digital asset holders and ensure consistent reporting requirements across different asset classes. Aviva Aron-Dine, performing the duties of Assistant Secretary for Tax Policy, stated:
These regulations will help ensure that all taxpayers play by the same set of rules and have access to the information they need to file their taxes accurately. Aligning tax reporting requirements for digital assets with those of other assets will make filing easier and cheaper for compliant taxpayers while also helping close the tax gap.
However, opponents of the IRS rule argue that it exceeds the agency’s authority and places impractical requirementson DeFi platforms.
Legislative Action and Senate Support
In the Senate, Senator Ted Cruz (R-Texas) has introduced a companion resolution, highlighting bipartisan concerns over the IRS’s approach to DeFi taxation. The Congressional Review Act (CRA) serves as the legislative tool for this reversal, allowing Congress to nullify federal regulations with a simple majority vote.
Next Steps and Impact on DeFi—Uniswap (UNI)
For the resolution to take effect, it must pass both the House and Senate and receive the President’s signature. If successful, this legislative action would prevent the IRS from enforcing the current DeFi tax reporting requirements, prompting a reevaluation of how decentralized platforms are regulated.
A key player in the DeFi space, Uniswap (UNI), is among the platforms significantly impacted by these regulatory developments. As of now, Uniswap’s governance token (UNI) is trading at approximately $8.11, reflecting a 2.31% decrease in the past day and 12.47% in the past week.
