On March 11, the House voted 292-132 in favor of repealing the IRS DeFi broker rule, which would have required DeFi platforms to report users’ transaction data to the Internal Revenue Service (IRS). This came after the Senate’s March 4 vote, where the motion to repeal passed 70-27.
The rule was initially introduced during the Biden administration as part of an effort to extend tax reporting obligations to digital assets. However, critics argued that enforcing such a rule on decentralized platforms, which do not have direct control over users’ transactions, was technically unfeasible and posed a significant privacy threat.
Bipartisan Support and Opposition
Despite being proposed by Republican Representative Mike Carey, the resolution to repeal the rule saw support from both sides of the aisle. Notably, 76 Democrats joined the majority of Republicans in voting to eliminate the rule.
Carey, a strong opponent of the regulation, stated:
✅ Passed! ✅
— Congressman Mike Carey (@RepMikeCarey) March 11, 2025
The House just passed my bill to repeal the IRS DeFi Broker Rule in a strong, bipartisan fashion.
Now we need to get it on @POTUS's desk and signed into law. pic.twitter.com/lCWAjICPJV
House Financial Services Committee Chairman French Hill also praised the repeal, calling it a crucial step in preventing regulatory overreach that could push digital asset innovation overseas.
On the other hand, 132 Democrats voted against the repeal, expressing concerns about tax compliance and potential financial crimes. Representative Lloyd Doggett voiced strong opposition, arguing that repealing the rule creates a loophole that could be exploited by tax evaders, money launderers, and illicit actors.
If signed into law, this resolution would block the IRS from implementing similar tax reporting rules for DeFi without explicit congressional approval. This is seen as a victory for the crypto industry, which has been pushing for regulatory clarity while opposing excessive government intervention.
Blockchain Association CEO Kristin Smith called the vote “an encouraging sign of a new era for crypto in Washington.”Many industry leaders believe that the move signals a growing recognition in Congress of the unique challenges decentralized technologies present and the need for tailored regulations that foster innovation rather than stifle it.
Next Steps: Senate Vote and Presidential Approval
Although the Senate has already voted in favor of the repeal, the resolution must pass another vote due to procedural budgetary rules before heading to President Donald Trump’s desk. Trump has indicated support for the repeal, making it likely that the resolution will be signed into law.
The White House is pleased to announce its support for the CRA introduced by @SenTedCruz and @RepMikeCarey to rescind the so-called Broker DeFi Rule, an 11th hour attack on the crypto community by the Biden administration. pic.twitter.com/T7Hxasb4aC
— David Sacks (@davidsacks47) March 4, 2025
This decision marks a pivotal moment for cryptocurrency regulation in the U.S. While it relieves DeFi platforms from burdensome compliance requirements, it also raises questions about future tax reporting mechanisms for digital assets. Lawmakers and regulators will now have to find alternative ways to ensure tax compliance without imposing technically unworkable rules on decentralized platforms.
HODL Team
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