U.S. House Votes to Overturn IRS DeFi Broker Rule
In a significant move, the U.S. House of Representatives voted to overturn an IRS rule that classified crypto entities as brokers, requiring them to collect specific taxpayer and transaction information, including decentralized finance (DeFi) platforms. The bipartisan majority, with a vote of 292-132, aligned with the U.S. Senate in advancing the Congressional Review Act resolution to reverse the rule that was finalized during the last days of former President Joe Biden’s administration.
Missouri Republican Jason Smith emphasized the potential harm to U.S. businesses and innovation posed by the IRS rule, stating that DeFi platforms are distinct from centralized crypto exchanges and traditional financial institutions. He highlighted the inability of DeFi platforms to collect the necessary user information for implementing the rule.
Last week, the Senate also voted to overturn the rule, with 70 Senators in favor. President Donald Trump’s senior advisers have recommended that he sign the provision. However, due to budget rules, the Senate will need to approve the resolution again. If both chambers agree and Trump signs it, the IRS will be prohibited from reintroducing a similar rule in the future.
During the House debate, Illinois Democrat Danny Davis defended the rule, linking it to the bipartisan Infrastructure Investment and Jobs Act of 2021. He drew parallels between crypto transactions and stock sales, emphasizing the importance of brokers reporting sales proceeds to both taxpayers and the IRS.
North Carolina Republican Tim Moore criticized the rule for surpassing Congress’s intentions with the 2021 law, asserting that it imposed excessive burdens on software developers and jeopardized American leadership in digital asset innovation.
Texas Democrat Lloyd Doggett raised concerns about the resolution, labeling it as “special interest legislation” that could be exploited by tax evaders, criminals, and terrorist financiers. He also warned that it could add $4 billion to the national debt, contradicting President Trump’s objective of reducing the debt.
The House vote on the continuing resolution to fund the U.S. government until Sept. 30, 2025, also passed with 217 votes in favor and 213 against. The funding resolution is now headed to the Senate for further consideration.
The decision to overturn the IRS rule marks a significant victory for the crypto industry and signals a shift in how regulatory measures are perceived and implemented in the digital asset space.
