- The House and Senate voted to repeal the IRS DeFi Broker Rule.
- The repeal would reduce compliance burdens and boost innovation in decentralized finance.
After S.J.Res.3—a resolution to overturn an IRS rule requiring DeFi platforms to report digital asset transactions—passed the U.S. Senate, it moved to the House of Representatives for approval before reaching President Donald Trump.
The U.S. House of Representatives, with a 292-132 vote, joined the Senate in advancing the Congressional Review Act resolution to overturn the controversial DeFi Broker Rule introduced during the final days of ex-President Joe Biden’s administration.
This rule would have required decentralized exchanges and DeFi platforms to report user transactions, including gross proceeds from crypto sales, to the IRS.
Opponents argued that the rule imposed excessive compliance burdens and posed significant privacy risks. Republican Representative Mike Carey criticized it as a “massive government overreach” that would have “invaded the privacy of tens of millions of Americans” while hindering innovation.
Execs weigh in…
Echoing similar concerns, Missouri Republican Jason Smith warned that the rule threatened U.S. businesses and discouraged technological progress.
He said,
“There are real questions that the rule can ever even be administered.DeFi exchanges are not the same as centralized crypto exchanges or traditional banks or brokers. DeFi platforms do not and cannot even collect the information from users needed to implement this rule.”
House Financial Services Committee Chairman French Hill also criticized the DeFi Broker Rule, labeling it “a clear example of government overreach” that could push digital asset innovation offshore.
His concerns align with those of other lawmakers who argue that excessive regulation may stifle the U.S. crypto industry.
However, not all legislators supported overturning the rule.
Illinois Democrat Danny Davis defended its origins in the 2021 bipartisan Infrastructure Investment and Jobs Act, pushing back against the resolution and likening cryptocurrency to traditional stocks.
He said,
“Probably to no one’s surprise, when there is independent reporting on these sales, taxpayers are more likely to report their income to the Internal Revenue Service.”
Impact on the crypto industry
The IRS DeFi Broker Rule repeal is a major win, reducing compliance burdens and boosting decentralized finance confidence.
With reduced regulatory pressure, DeFi projects may see accelerated innovation, while institutional interest in the sector could grow.
The decision also strengthens the U.S.’s position as a competitive hub for blockchain development, preventing talent and investment from shifting overseas.
Market sentiment is already turning bullish, with analysts predicting further positive momentum if President Trump signs the repeal into law.
What lies ahead?
Kristin Smith, CEO of the Blockchain Association, has already called it a “big day for DeFi,” emphasizing that bipartisan backing helped prevent a rule that “would have crippled DeFi in the U.S.”
Now, the final step rests with President Trump, who has ten days to sign the repeal into law. Given the administration’s strong support, the repeal is expected to be enacted by mid-to-late March 2025.
