Highlights: IRS DeFi broker rule overturned. Crypto groups drop lawsuit. Kristin Smith exits Blockchain Association.

Hifi Tech India

The DeFi broker rule saga is behind us. It only took 3+ years.

Crypto industry groups all but closed the book on the matter on Wednesday when they requested the lawsuit they filed against the IRS be dismissed.

"The parties agree that, in light of the enactment of Joint Resolution 25, the Final Rule has no force and effect, meaning this action is now moot,” they wrote.

The Resolution, brought under the Congressional Review Act, sought to nix an IRS rule  (publish in December) that required “certain decentralized finance industry participants to file and furnish information returns as brokers.”

The Resolution passed the House and Senate with bipartisan support and last week President Trump signed it into law, officially reversing the rule. 

A quick timeline of the latest events shows the speed with which this was done after the administration change:

• Dec. 27: Blockchain Association, the DeFi Education Fund, and the Texas Blockchain Council sue the IRS.
• Jan. 22: Two days after President Trump has been sworn in, Rep. Mike Carey and Sen. Ted Cruz introduce resolutions to reverse the IRS rule.
• Feb. 10: The court orders a status report from the plaintiffs, who say they are watching to see if the legislation passes.
• Feb. 19: Industry firms write a letter to Senate and House leaders urging them to repeal the IRS rule.
• Feb. 28: Legislation to reverse the rule advances out of the House Ways and Means Committee.
• March 4: 70 senators, including 18 Democrats,vote a favor of the CRA.
• March 11: House members pass the bill too. Final vote tally: 292-131.
• April 10: Trump signs H.J. Res. 25 into law.

And now this court filing.

We should note that this tale started way before December. When The Infrastructure Investment and Jobs Act became law in 2021, it amended the definition of a “broker” to include “any person who, for consideration, is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person.”

Blockchain Association CEO Kristin Smith warned in an opinion piece prior to the bill’s passage that it would “threaten to sabotage American leadership in digital currency and send jobs overseas.”

Smith is actually leaving the crypto advocacy group to become president of the Solana Policy Institute in May. So not only does the suit dismissal put a bow on the broker rule issue — Smith is, in a sense, putting a bow on her Blockchain Association tenure.