- A coalition of U.S. digital asset companies has urged Congress to vote in favor of a resolution overturning a new DeFi broker rule
- The rule, finalized at the end of the Biden administration, expands the definition of a “broker” to include DeFi software providers, imposing heavy compliance burdens
- Industry leaders warn that the regulation threatens privacy, stifles innovation, and unfairly disadvantages American companies while leaving foreign competitors untouched
A major battle is brewing in Washington over cryptocurrency regulation, as leading digital asset firms call on Congress to repeal a new rule that they argue threatens the future of decentralized finance (DeFi) in the U.S. The Blockchain Association, along with other key industry players, has sent a letter to lawmakers urging them to support Senator Ted Cruz’s Congressional Review Act (CRA) resolution, which seeks to overturn the controversial broker rule. The association called the rulemaking “misguided” and warned that it threatens to undermine the lead that America has taken in the blockchain race.
Industry Fights Back Against “Overreach”
The letter from the Blockchain Association and other digital asset companies urges Congress to overturn the recently finalized DeFi broker rule, arguing that it constitutes regulatory overreach and threatens U.S. leadership in decentralized finance.
The rule, introduced in the final days of the Biden administration, expands the definition of a “broker” to include DeFi software providers, even if they do not take custody of user assets. This would require these companies to collect and report personal user data to the IRS, a task that industry leaders claim is both technologically impractical and a violation of financial privacy.
The Blockchain Association warns that the compliance burden is massive, with the IRS itself estimating over four billion hours of paperwork annually and a cost of over $260 billion—an increase that would impact the government’s overall regulatory workload by one-third.
The letter also highlights the disproportionate impact on U.S. companies, as the rule only applies to domestic firms while foreign DeFi providers serving American users remain unaffected. This could drive innovation offshore and weaken the country’s competitive edge in financial technology. The signatories argue that such consequential policy decisions should be made by Congress, not through last-minute rulemaking by regulatory agencies.
Congressional Review Act to the Rescue?
Senator Ted Cruz’s CRA resolution provides a potential path to nullifying the rule before it takes effect. The resolution, if passed, would repeal the regulation on the grounds that it oversteps agency authority and contradicts congressional intent. “Policy decisions with such severe consequences should be made by Congress deliberately – not accidentally through ill-conceived midnight rulemaking,” the letter to lawmakers states.
The crypto industry sees this as a crucial moment for the future of DeFi innovation in the U.S. If the rule stands, industry leaders warn that companies could be forced offshore, depriving the U.S. of a burgeoning sector that could drive job creation and economic growth.
As the vote on Cruz’s resolution approaches, all eyes are on Congress to determine whether it will rein in what critics describe as excessive government overreach—or allow the DeFi industry in America to face an uncertain future.
