U.S. lawmakers have taken a significant step toward overturning the “DeFi broker rule,” a regulation that would require decentralized exchanges and other digital asset brokers to report transaction details to the Internal Revenue Service (IRS).
The House Ways and Means Committee voted 26-16 on February 26 to advance a resolution that seeks to repeal the rule, which is set to take effect in 2027.
Approved by the IRS on December 5, the regulation aims to expand existing reporting requirements by mandating brokers to disclose gross proceeds from cryptocurrency sales, including information about taxpayers involved in these transactions.
Critics argue that the rule is both impractical and an overreach of government authority.
Pushback from the Crypto Industry
Miller Whitehouse-Levine, CEO of the DeFi Education Fund, has strongly opposed the regulation, calling it an “unlawful and unconstitutional overreach.”
He urged lawmakers to act swiftly, arguing that repealing the rule is necessary to preserve financial innovation in the U.S.
“We urge all members — and all who want to establish the United States as a hub for financial innovation — to act swiftly to uphold Congress’s original intent by supporting the motion to overturn this misguided rule.”
If the resolution passes in the House, it will move to the Senate for approval.
Should it clear both chambers, it will then be sent to President Donald Trump, who will decide whether to sign it into law or veto the measure.
House Ways and Means Committee Chairman Jason Smith criticized the legislation, stating that it was rushed into approval during former President Joe Biden’s final days in office.
Smith argued that the rule is not only unfair but also unworkable, as decentralized finance (DeFi) brokers do not collect the user information needed to comply with such reporting requirements.
“Not only is it unfair, but it’s unworkable. DeFi brokers do not even collect the information from users needed to implement this rule,” Smith said.
Smith also referenced former IRS Commissioner Charles Rettig, who had warned that the regulation would create excessive paperwork that the IRS lacks the resources to manage effectively.
A Shifting Regulatory Landscape
The push to repeal the DeFi broker rule comes amid a broader shift in U.S. crypto regulation following the Republican Party’s control of both the Senate and the House.
With hundreds of pro-crypto candidates winning seats in Congress, many industry leaders speculate that the U.S. government could become the most crypto-friendly administration in history.
The political shift has already had an impact.
Throughout February, the U.S. Securities and Exchange Commission (SEC) dropped multiple enforcement actions against crypto firms, signaling a change in regulatory tone.
As reported, cryptocurrency enforcement in the United States may ease under the upcoming administration of Republican President-elect Donald Trump, with regulatory priorities expected to shift.
Speaking at a legal conference in New York, current and former senior government lawyers indicated that while financial fraud cases will still be pursued, the Justice Department’s focus will likely move toward immigration enforcement, a key campaign promise of Trump.
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