The U.S. House of Representatives voted to overturn an IRS rule classifying decentralized finance (DeFi) entities as brokers, requiring them to collect taxpayer and transaction data. Lawmakers passed the resolution with bipartisan support in a 292-132 vote. After a similar decision by the Senate, the measure moves closer to becoming law.
Rep. Jason Smith spoke in support of the Congressional Review Act resolution on Tuesday before the House vote (C-SPAN)
Why Lawmakers Oppose the IRS DeFi Broker Rule
The IRS rule, introduced in the final days of former President Joe Biden’s administration, sparked strong opposition from lawmakers and the crypto community. Critics argue that it places impractical regulatory burdens on DeFi platforms. Missouri Republican Jason Smith stressed that DeFi exchanges operate differently from centralized crypto exchanges or traditional financial institutions. Their structure makes collecting user information as required by the rule nearly impossible.
Earlier this month, the Senate voted 70-30 to reject the IRS regulation. President Donald Trump’s senior advisers have already expressed support for the resolution. If the Senate approves it again, Trump is expected to sign it into law. Once enacted, the resolution will block the IRS from implementing similar rules in the future.
Lawmakers Debate the Impact on Crypto Taxation
Not all lawmakers backed the measure. Illinois Democrat Danny Davis defended the original IRS rule, arguing that it originated from the bipartisan Infrastructure Investment and Jobs Act of 2021. He likened cryptocurrency transactions to stock sales, noting that brokers in traditional finance must report transactions to the IRS, which encourages tax compliance among investors.
However, North Carolina Republican Tim Moore criticized the IRS rule, stating that it exceeded congressional intent. He argued that it would burden software developers and weaken U.S. leadership in digital asset innovation. Texas Democrat Lloyd Doggett also opposed the resolution. He warned that it could aid tax evaders, criminal organizations, and terrorist financiers. Additionally, he raised concerns that repealing the rule might add $4 billion to the national debt, contradicting Trump’s goal of reducing government spending.
What’s Next for DeFi Regulation?
Shortly after the IRS rule vote, lawmakers passed a separate resolution extending government funding through September 30, 2025. That measure narrowly passed 217-213 and now heads to the Senate for further review. If the repeal of the IRS rule is finalized, it will mark a major victory for the DeFi industry, shaping future crypto taxation and compliance regulations.
