US House Moves to Dismantle IRS DeFi Broker Regulation

The US House of Representatives moved forward on Tuesday with a key vote to repeal the IRS DeFi broker rule. The rule sought to impose strict data collection requirements on decentralized finance (DeFi) platforms. Lawmakers argued that it unnecessarily burdens the crypto industry, prompting widespread opposition.

The resolution now moves to the Senate. A final vote will decide if the IRS is barred from reintroducing similar regulations.

The House vote passed with bipartisan support. A total of 292 lawmakers backed the repeal, while 132 opposed it. Notably, 76 Congressional Democrats joined Republicans in overturning the rule. They sided with critics who argued that the proposed framework imposed unrealistic compliance burdens on DeFi protocols.

There it is! Joined by 76 Democrats, a bipartisan coalition in the House just passed a resolution rescinding the IRS' unworkable DeFi broker rule which would have set a dangerous precedent for Americans' privacy. It will now go to the Senate for a quick re-vote and then @POTUS… https://t.co/QvrTt6AO5N

— Faryar Shirzad 🛡️ (@faryarshirzad) March 11, 2025

Industry Leaders Slam IRS DeFi Rule as Unworkable and Harmful

The controversial rule was introduced under the Biden administration in December. It aimed to classify DeFi platforms as brokers. This designation would have required them to report user transactions and potential tax obligations to the IRS. It effectively extended traditional financial reporting rules to decentralized platforms.

Opponents argued that such a move would be impractical and could stifle innovation in the US crypto sector. Many warned that enforcing compliance on decentralized protocols—where no central entity controls user funds—would be technically infeasible and could drive digital asset businesses overseas.

Last month, the Blockchain Association urged Congress to overturn the rule, reinforcing the call for legislative action.

DeFi Broker Rule Threatens US Crypto Leadership: French Hill

David Sacks, the White House’s AI and Crypto Czar, voiced his support for repealing the rule. In a post on X, he indicated that the administration would back Congressional efforts to eliminate the broker rule.

House Financial Services Committee Chairman French Hill also condemned the proposal, calling it an example of excessive government intervention.

“The Biden Administration’s controversial ‘Broker Rule’ is a clear example of government overreach that threatens to push American digital asset development overseas,” Hill stated. “I was proud to protect America’s leadership in the digital asset ecosystem and vote to overturn this harmful, anti-innovation midnight rulemaking.”

Hill further said that defining DeFi software providers—who never take custody of user funds—as “brokers” would create costly and unnecessary reporting obligations. He argued that such measures would undermine privacy, hinder technological progress and weaken the US’ position as a leader in financial innovation.

The resolution now awaits a Senate vote. If passed, it will move to President Donald Trump’s desk for final approval.

Once signed into law, the measure will prevent the IRS from issuing similar proposals in the future, marking a significant win for the DeFi industry and its advocates.