The US House of Representatives has voted overwhelmingly to overturn the controversial DeFi broker rule introduced by the Internal Revenue Service (IRS) under President Joe Biden’s administration.
The measure passed with strong bipartisan support, as 292 lawmakers voted in favor while 132 opposed it. Although many Democrats resisted the repeal, 76 broke ranks to join Republicans in overturning the rule.
Last December, the IRS finalized the broker rule, expanding tax reporting requirements to include digital asset operators. The regulation classified brokers—including DeFi front-end operators—as responsible for enforcing Know Your Customer (KYC) measures, tracking user activity, reporting transactions, and ensuring compliance.
Critics argued that applying these requirements to DeFi platforms was impractical. Unlike centralized exchanges, DeFi platforms do not control user funds or have access to personal data, making it impossible to comply with the rule.
House Ways and Means Committee Chairman Jason Smith condemned the rule, calling it unfair and difficult to implement. He emphasized that DeFi platforms do not function like traditional financial institutions and cannot collect the user information required for compliance.
He added:
“These new IRS crypto regulations require millions of taxpayers to file new Form 1099s in a way that would overwhelm the agency and have little or no value to effective and efficient tax administration.”
Meanwhile, this House decision follows the Senate’s March 4 vote to overturn the controversial provision.
With both chambers now aligned, the resolution heads back to the Senate for final approval before reaching President Donald Trump’s desk. Notably, the White House has already indicated support for the move.
Crypto community reacts
Crypto community leaders have welcomed the decision, celebrating it as a significant win.
Jake Chervinsky, Chief Legal Officer at Variant Fund, highlighted the importance of bipartisan support, noting that 94 Democratic legislators backed the repeal. According to Chervinsky, this signals a defeat for the anti-crypto agenda.
Coinbase’s Chief Policy Officer, Faryar Shirzad, described it as the most significant bipartisan crypto vote to date, adding that it strengthens momentum for Congress to advance stablecoin and market structure legislation.
He added:
“The IRS’ unworkable DeFi broker rule would have set a dangerous precedent for Americans’ privacy.”
Meanwhile, DeFi Education Fund CEO Miller Whitehouse-Levine also praised the vote, emphasizing that a bipartisan supermajority of 292 House members recognized the flaws in the IRS and Treasury’s broker rule. He stated that this decision represents a positive step toward fostering innovation in the US.
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