Sacks: White House Backs Repealing DeFi Broker Rule

DeFi Regulation: A Big Change!

The White House has made a big decision about how to treat something called decentralized finance, or DeFi for short. They want to stop a rule that was made by the IRS, which is like the tax collector in the U.S. This rule said that people who make software for DeFi should be treated like brokers, which means they have to collect a lot of information about people who use their software. This is a problem because it’s hard for small companies and open-source projects to do this, and it might also hurt privacy.

What’s the Problem with This Rule?

The rule was made in December 2024, just before the new U.S. government started. It says that DeFi projects have to tell the IRS about all the transactions that happen on their software, and they have to collect information about the people who use it, like their names and what they’ve done. This is a problem because it’s hard for small companies and open-source projects to do this, and it might also hurt privacy because people don’t want the government to know everything they do.

People Don’t Like This Rule

Lots of people in the crypto world don’t like this rule. They say it’s not fair to treat DeFi software makers like brokers, and it might stop new ideas from happening in the U.S. They also worry about privacy because the rule wants them to tell the government about people’s private business.

Can We Stop This Rule?

Some important people in the U.S. government want to stop this rule. Senator Ted Cruz and Representative Mike Carey have tried to stop it using something called the Congressional Review Act. If they succeed, the President might say it’s okay to stop the rule. The White House says they would like this to happen.

What Would Happen if the Rule Stops?

If the rule stops, it would be easier for U.S. DeFi companies to do their work because they wouldn’t have to collect so much information. This would let them focus on making new things instead of worrying about the rules. It would also help keep people’s information private because the government wouldn’t need to know so much about what they’re doing.

What Does This Mean for DeFi?

The White House wants to stop this rule, which is a big change. If they succeed, it would be easier for DeFi to grow in the U.S. It’s important for the people who make the rules to think about how to help new technologies, but also to make sure they’re fair and safe.

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Sources:
– cointelegraph.com
– cryptobriefing.com
– chaincatcher.com