The U.S. House of Representatives has voted to repeal an IRS regulation that classified decentralized finance (DeFi) entities as brokers. Thus, requiring them to gather taxpayer and transaction data. The resolution received bipartisan approval with a 292-132 vote. Which moves closer to becoming law following a similar decision by the Senate.
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 Regulation
The IRS rule, enacted during the final days of President Joe Biden’s administration, faced strong resistance from lawmakers and the crypto industry. Opponents argue that it imposes unworkable compliance requirements on DeFi platforms. Missouri Republican Jason Smith emphasized that DeFi exchanges function differently from centralized crypto platforms or traditional financial institutions, making it nearly impossible to collect user data as required.
Earlier this month, the Senate rejected the IRS regulation in a 70-30 vote. Senior advisers to President Donald Trump have already endorsed the resolution, and if it secures final approval, Trump is expected to sign it into law. This would prevent the IRS from implementing similar regulations in the future.
Debate Over Crypto Taxation and Compliance
Not all lawmakers supported the repeal. Illinois Democrat Danny Davis defended the IRS rule, pointing out that it stemmed from the bipartisan Infrastructure Investment and Jobs Act of 2021. He compared cryptocurrency transactions to stock trades, where brokers must report transaction data to the IRS to ensure tax compliance.
In contrast, North Carolina Republican Tim Moore criticized the IRS regulation, arguing that it overstepped congressional intent and would place undue burdens on software developers while undermining U.S. innovation in digital assets. Texas Democrat Lloyd Doggett also opposed the repeal, warning that it could facilitate tax evasion, criminal activity, and terrorist financing. Additionally, he cautioned that overturning the rule might add $4 billion to the national debt, conflicting with Trump’s fiscal policies.
The Future of DeFi Regulation
Following the vote on the IRS rule, lawmakers approved a separate resolution extending government funding through September 30, 2025. That measure narrowly passed 217-213 and now awaits Senate consideration. If the IRS rule repeal is finalized, it would represent a significant victory for the DeFi sector, shaping the future of cryptocurrency taxation and regulatory policies.
Disclaimer:
This article is for informational purposes only and does not constitute financial, tax, or legal advice. Readers should consult professionals before making decisions regarding cryptocurrency regulations and compliance.RS rule is finalized, it will mark a major victory for the DeFi industry, shaping future crypto taxation and compliance regulations.
