Introduction
The U.S. House of Representatives has voted to strike down an IRS rule that labeled decentralized finance (DeFi) platforms as brokers, mandating them to gather taxpayer and transaction details. The resolution passed with bipartisan support, securing a 292-132 tally, and edges closer to law following a parallel Senate decision.
Rep. Jason Smith championed the Congressional Review Act resolution on Tuesday ahead of the House vote, as aired on C-SPAN.
Why Lawmakers Resist the IRS DeFi Broker Rule
Introduced late in former President Joe Biden’s term, the IRS rule drew fierce pushback from lawmakers and the crypto sector. Opponents argue it imposes unfeasible regulatory demands on DeFi platforms. Missouri Republican Jason Smith emphasized that DeFi exchanges differ fundamentally from centralized crypto exchanges or conventional financial bodies, lacking the structure to collect user data as the rule requires.
This month, the Senate voted 70-30 to nix the IRS regulation, with President Donald Trump’s key aides signaling approval. Should the Senate reaffirm this, Trump is poised to sign it, barring the IRS from crafting similar rules later.
Lawmakers Debate Crypto Taxation Effects
Support wasn’t universal. Illinois Democrat Danny Davis backed the original IRS rule, tying it to the bipartisan Infrastructure Investment and Jobs Act of 2021. He compared cryptocurrency trades to stock deals, noting that traditional finance brokers report to the IRS, boosting investor tax compliance.
Conversely, North Carolina Republican Tim Moore slammed the rule for overstepping Congress’s intent, claiming it burdens software developers and dims U.S. dominance in digital asset innovation. Texas Democrat Lloyd Doggett also resisted the repeal, cautioning it could shield tax dodgers, crime syndicates, and terrorist backers. He flagged a potential $4 billion national debt hike, clashing with Trump’s aim to cut spending.
What’s Next for DeFi Regulation?
Soon after the IRS rule vote, lawmakers greenlit a separate measure to fund the government through September 30, 2025, passing narrowly at 217-213. It now awaits Senate scrutiny. If the IRS rule repeal solidifies, it’ll be a landmark win for the DeFi industry, steering the future of crypto taxation and compliance rules.