Why the US House of Representatives repealed the IRS’s controversial DeFi broker rule

The US Internal Revenue Service’s controversial DeFi broker rule, which would have required decentralized platforms to report user transactions, is on the verge of being scrapped after a decisive House vote.

According to a March 11 voting session in the US House of Representatives, lawmakers voted 292-132 in favour of repealing the DeFi broker rule with bipartisan support as 76 Democrats joined Republicans in backing the repeal.

What is the DeFi broker rule?

The DeFi broker rule, introduced by the IRS in August 2023 and finalised in January 2025, aimed to bring decentralized finance platforms under traditional tax reporting standards.

It required certain DeFi operators, including front-end providers for decentralized exchanges, to collect and report user transaction data, such as gross proceeds from crypto sales, to the IRS.

With this, the IRS sought to standardize tax reporting requirements for digital asset transactions, applying the same rules that traditional financial institutions follow.

The agency contends that the rule would “level the taxpayer playing field” by ensuring crypto traders couldn’t bypass tax obligations that apply to stocks or other securities.

Yet it faced strong opposition from industry leaders who argue that it is unworkable for DeFi platforms, which often operate without centralised control and are not designed to collect user data.

Despite widespread pushback, the IRS and Treasury have defended the rule, stating that DeFi should not be exempt from financial regulations. 

In a joint statement late last year, they argued that “persons with technology expertise that operate trades or businesses relating to financial services should comply with the same rules as any other person operating financial services businesses.”

The majority of lawmakers are in favour

The US House vote follows a March 4 Senate decision, where lawmakers voted 70-27 in favour of overturning the rule. The resolution will now head back to the Senate for a final vote before landing on President Donald Trump’s desk.

As previously reported by Invezz last month, the House advanced a similar resolution to repeal the rule.

Meanwhile, the White House has already signalled its support, with crypto advisor David Sacks recently backing the motion.

As such, the repeal will likely be finalised once it reaches the president.

Following the House vote, Republican Representative Mike Carey, who introduced the repeal motion, called the rule a “massive government overreach” that would invade the privacy of tens of millions of Americans.

House Financial Services Committee Chairman French Hill agreed, noting that if implemented, it would “push American digital asset development overseas.”

“I was proud to protect America’s leadership in the digital asset ecosystem and vote to overturn this harmful, anti-innovation midnight rulemaking,” he said in a March 11 press release.