House Committee Votes to Repeal Biden’s DeFi Broker Rule

The House Ways and Means Committee has voted to repeal the Biden Administration’s last-minute “DeFi Broker Rule,” arguing that it would stifle innovation and weaken American leadership in digital assets.

The rule, which would have forced DeFi providers to collect and report sensitive taxpayer information, has been widely criticized as impractical and damaging to the crypto industry.

🛑 IRS Overreach? Lawmakers Push Back

Committee Chairman Jason Smith accused the IRS of overstepping its authority, stating:

“The IRS stretched its directives from Congress in the 2021 infrastructure law to enact a cryptocurrency agenda and unnecessarily regulate the providers of digital wallets.”

The Ways and Means Committee, responsible for tax policy and economic oversight, used the Congressional Review Act to block the rule from taking effect.

🔹 Next Steps for Repeal:

✅ Moves to the House for a vote
✅ If passed, goes to the Senate
✅ If both chambers approve, it lands on President Trump’s desk for final approval

💥 Critics Slam the DeFi Broker Rule

Opponents argue that the rule is unenforceable and counterproductive, with even a former IRS commissioner warning:

“This rule would overwhelm the agency and have little to no value for tax administration.”

🔹 The IRS estimated it would generate 8 billion new tax filings annually, adding a massive bureaucratic burden.
🔹 Unlike centralized exchanges, DeFi platforms do not collect personal user data, making the rule impossible to enforce.

Chairman Smith also pointed out the economic imbalance the rule would create:

“The winners of this last-minute rule are foreign digital asset companies who are exempt from the burdensome requirements. The losers are the roughly 1 in 4 Americans who own cryptocurrency.”

🚀 Crypto Regulation in the U.S.: What’s Next?

The committee’s 26-16 vote in favor of repeal signals strong congressional opposition to excessive DeFi regulations.

This move is part of a broader debate on how to regulate digital assets in the U.S. without crushing innovation.

🔹 If the DeFi Broker Rule is officially repealed, it could clear the way for a more practical regulatory framework that aligns with decentralized finance realities.
🔹 The question remains: Will Congress push forward a more crypto-friendly regulatory approach, or will new restrictions replace the repealed rule?

For now, the industry is watching closely as the repeal heads to the House for a vote.