- The U.S. House of Representatives has voted to overturn the Internal Revenue Service’s (IRS) DeFi broker rule
- The rule would have imposed reporting requirements on decentralized finance (DeFi) platforms
- Lawmakers argue the rule would have placed an “impossible burden” on developers
The planned IRS rule change on Decentralized Finance (DeFi) exchanges would have “placed impossible burdens on software developers,’ according to a lawmaker who voted the bill down yesterday. North Carolina Republican Tim Moore was one of 292 members of the U.S. House of Representatives who voted to overturn an IRS rule that would have classified DeFi platforms as brokers, thereby subjecting them to stringent reporting requirements. This bipartisan decision followed a similar vote in the Senate, reflecting widespread concern that the rule imposes unrealistic obligations on DeFi developers.
Senate Back House Vote
The IRS rule, finalized in the closing days of the Biden administration, sought to expand the definition of “broker” to include DeFi platforms. This classification would have required these platforms to collect and report detailed information on user transactions, akin to traditional financial institutions.
Proponents argued that this measure was necessary to enhance tax compliance within the rapidly growing crypto industry, but critics contended that the rule was both “unfair” and “unworkable,” asserting that DeFi platforms, by their decentralized nature, lack the ability to gather the required user information. Earlier this week, the U.S. Senate voted 70-27 to overturn the bill, with the U.S. House of Representatives next up. The result was a 292-132 vote to overturn.
The House just overturned the Biden administration’s DeFi broker rule, which would have forced providers of non-custodial software to KYC users.
The vote was 292-131.
The Senate vote last week was 70-27.94 Congressional Democrats voted yes. The anti-crypto army is defeated 🇺🇸 https://t.co/Jn7yNOwVCF
— Jake Chervinsky (@jchervinsky) March 11, 2025
Implications of the Repeal
The successful passage of the Congressional Review Act resolution in both chambers signifies a notable victory for the crypto industry, which has lobbied against regulations perceived as hindrances to technological advancement. The repeal now returns to the Senate for a second vote before being sent to President Donald Trump to sign into law. This would bar the IRS from implementing similar rules in the future without explicit congressional authorization.
However, some lawmakers have expressed concerns that overturning the rule could facilitate tax evasion and other illicit activities. Texas Democrat Lloyd Doggett criticized the resolution as “special interest legislation” that could be exploited by “wealthy tax cheats, drug traffickers, and terrorist financiers,” potentially adding $4 billion to the national debt.
