DeFi: Congress Crushes Controversial Crypto Broker Rule

• Congress overturns Biden’s DeFi broker rule in a bipartisan vote.
• Critics argued the rule misunderstood DeFi and threatened innovation.
• This is a major victory for the industry and a positive sign for crypto regulation.

DeFi just scored a major win. The US congress has overwhelimly voted to overturn the Biden administration’s “broker” rule.” This rule sought to impose KYC on non-custodial software providers, sparking massive backlash from the crypto community.

With 94 Democrates siding with Republicans, the House voted 292-131, striking down the rule after a 70-27 Senate vote last week.

DeFi: Congress Crushes Controversial Crypto Broker Rule 3

The overturn is a huge deal for crypto proponents who argue that the rule reflected a fundamental misunderstanding of how DeFi service providers works. They point out that these platforms dont function like traditional brokers as there is no central intermediary enabling transactions.

Crypto advocates like Ji Kim of the Crypto Council argued that Congress’s broad interpretation of the term “broker” would raise constitutional concerns and improperly classify decentralized apps as “financial institutions.” This would affect the DeFi industry, thus crippling American innovation and leadership.

Critics also argued that the rule unfairly treated all DeFi participants who provide “front-end trading services” (like software tools and websites) as traditional “brokers.”

It ignores the fact that decentralized applications do NOT take custody of assets, communicate actual transaction orders to custodians, have account or customer relationships w/ users, or many other responsibilities assumed by traditional brokers.

DeFi’s Last Hurdle: Will Trump Deliver the Win?

Simply put, this rule will restrict Americans from executing their own digital asset transactions, prohibit software developers from building transactions for self-custody wallets, and ultimately limit Americans’ access to DeFi, wrote Kim on his X post.

While there is one more procedural vote required by the Senate, which is expected to pass, this move is a huge step forward for DeFi. It signals that Congress is listening to the concerns of the crypto community and recognizing the importance of protecting innovation and self-custody.

As per FOX journalist Eleanor Terrett, the Senate will need to vote on the joint resolution one more time. After this final vote the resolution will go on to Donald Trump’s desk, as the first crypto-related ‘bill’ if signed into law.