U.S. House to Vote on Repeal of IRS DeFi Broker Rules

In Brief

The U.S. House of Representatives will vote on Tuesday to repeal the IRS DeFi broker regulation.

The Senate passed the repeal last week with a strong bipartisan vote of 70-27, including support from key Democrats.

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The U.S. House of Representatives is preparing to cast a decisive vote on Tuesday regarding the repeal of the controversial IRS DeFi broker rule. This regulation, which was introduced under the Biden administration, required decentralized finance (DeFi) protocols and decentralized application (dApp) developers to report user transactions to the IRS. Since its proposal, the rule has faced strong resistance from the crypto industry, which argues that it is not only technically impossible to enforce but also lacks a solid legal foundation due to the decentralized nature of these platforms.

The repeal effort gained substantial momentum last week when the Senate overwhelmingly voted 70-27 in favor of overturning the rule. The vote was particularly notable for its unexpected Democratic support, with influential figures like Senate Majority Leader Chuck Schumer and Senator Mark Warner siding with their Republican colleagues to strike down the regulation. The bipartisan nature of the vote suggests that concerns about the IRS’s approach to crypto taxation extend beyond party lines, particularly as lawmakers continue to grapple with how to regulate digital assets effectively without stifling innovation.

For the crypto industry, this House vote represents a potential turning point in regulatory oversight. Should the repeal pass, it would send a clear message that lawmakers are reconsidering how crypto taxation and compliance should be structured. Many in the industry argue that attempting to apply traditional financial regulations to DeFi is fundamentally flawed, as these platforms operate without centralized intermediaries that could reasonably comply with such reporting requirements.

Beyond the immediate implications for DeFi protocols, the vote also highlights the broader shift in the U.S. government’s attitude toward crypto regulation. Under the Trump administration, crypto-friendly policies have gained traction, with efforts to roll back regulatory constraints seen as hostile to the industry. The push to repeal the IRS rule aligns with Trump’s broader agenda of making the U.S. a global leader in digital assets, a stance further reinforced by his recent executive orders related to Bitcoin reserves and stablecoin regulations.

If the House successfully votes to repeal the IRS DeFi broker rule, it will mark one of the most significant regulatory victories for the crypto industry in recent years. It would also set a precedent for future policymaking, ensuring that DeFi is recognized as a fundamentally different financial model that requires a more nuanced regulatory approach. The final outcome of this vote will be closely watched by crypto firms, regulators, and investors alike, as it could shape the future of decentralized finance in the United States.

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