White House Shocks Crypto World: David Sacks Backs Repeal of the IRS DeFi Broker Rule

In a historic development, the White House has indicated its support for the repeal of the IRS DeFi broker rule. The December 2024 regulation, which defined “broker” to include decentralized finance (DeFi) platforms and subjected them to strict reportage requirements, has been faulted for stifling innovation and intruding into people’s private lives. The administration’s approval is in sync with congressional efforts led by Senator Ted Cruz and Representative Mike Carey to repeal the regulation. The decision is a policy pivot towards DeFi regulation, balancing the imperative of compliance and taxation and supporting development in this sector.

Congressional Pushback and Industry Response

The crypto industry, accompanied by friendly legislators, organized a collective front to challenge the IRS’s regulation of DeFi brokers. The Blockchain Association, which has over 75 actors, implored Congress to cancel the regulation in February of 2025, terming it a regulation overreach. Senator Ted Cruz submitted a resolution under the Congressional Review Act (CRA) to cancel the regulation, which he asserted was outside congressional intent and could stifle innovation in the DeFi market. The move in Congress was a sign of the growing political strength of the cryptocurrency market and its potential to mobilize in defense of perceived regulation overreach.

White House Approval of the Repeal Efforts

White House Crypto and AI Advisor David Sacks, in a big move, has declared that it strongly supports congressional repeal of the IRS DeFi broker rule. The administration is in agreement with concerns that the regulation can suppress American innovation and is also concerned with privacy in that taxpayers’ private data has to be disclosed. The administration’s decision to lend its support is one of balancing compliance and facilitating development in the DeFi sector. The decision is in harmony with champions in the sector, and this is one step towards more mature regulation in the rapidly evolving digital asset sector.

A Pivotal Moment for DeFi Regulation

The approval of the CRA resolution for the repeal of the IRS DeFi broker rule by the White House is a milestone in regulating decentralized finance (DeFi). It underscores the necessity of implementing a policy that is mindful of the unique character of DeFi platforms but not excessively burdensome in compliance. The move of the Senate to bring this resolution to a vote has significant implications for future regulation of America’s DeFi. Success in repealing could pave the way for targeted regulation that encourages innovation while making compliance easier and ensuring consumers are protected. Failure to repeal could foreshadow stricter regulation, which could slow the development of the DeFi ecosystem.

Navigating the Future of Crypto Regulation

The debate on the repeal of the IRS DeFi broker rule is reflective of the integration of regulation and innovation in the crypto sphere. Tax compliance is necessary, but regulations should not go to the point of stifling emerging technologies. The expression of White House approval of the repeal of this regulation is in line with recognizing there is a call for a well-crafted policy to facilitate growth while ensuring public interest. The future of digital assets is unfolding, and policymakers now find themselves having to design structures that can regulate innovation while not undermining regulatory purposes.

The end product of this legislative process will serve as a lead for future regulation of cryptos in America and how America can capitalize on decentralizing technologies. It is necessary to achieve this harmony in order to ensure America continues to remain in its position of preeminence in financial innovation and to ensure investors’ and consumers’ interests. The ongoing interaction of policymakers and industry experts will be part of designing a regulatory environment conducive to compliance and innovation.