The decentralized finance (DeFi) industry is relieved after Congress voted on March 12 to repeal an IRS rule requiring DeFi protocols to report crypto sales and taxpayer information. The rule, proposed in December 2024, faced criticism from industry lobby groups for its privacy infringements and perceived overreach. While the repeal is celebrated for protecting user privacy, observers note the need for clear regulatory frameworks for DeFi. Industry leaders argue that robust privacy measures are essential while complying with regulations to avoid potential sanctions. This is highlighted by recent calls for zero-knowledge proofs as a solution that could allow users to confirm data without compromising anonymity. As legislators continue to explore the regulation of the crypto space, including stablecoin bills and frameworks to better understand DeFi, the timeline for definitive regulations remains uncertain, with ongoing discussions surrounding the balance between innovation, user privacy, and compliance.

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