Senate votes to repeal IRS DeFi broker rule

The U.S. House of Representatives passed a resolution on March 11 to overturn a Biden-era IRS rule requiring decentralised finance (DeFi) platforms to report user transactions.

The measure now heads to the Senate for final approval before potential presidential signing.

The legislation, H.J.Res.25, targets the IRS’s “DeFi Broker Rule,” which critics argue would impose unworkable reporting requirements on decentralised exchanges.

Under the rule, DeFi platforms would be required to file Form 1099-DA and collect taxpayer data, a task proponents claim is technically infeasible for decentralised systems.

House Ways and Means Chairman Jason Smith (R-MO) called the rule a “politically motivated mandate” that “cripples American digital asset leadership.”

“DeFi exchanges differ fundamentally from centralised crypto exchanges or traditional banks and brokers. DeFi platforms lack the capability to gather the necessary user information to comply with this rule,” he emphasised, noting that DeFi platforms lack centralised infrastructure for compliance.

The resolution passed with bipartisan support: 76 Democrats joined all 216 Republicans in voting yes, while one Democrat abstained.

Earlier Senate approval on March 4 (70–27) and procedural requirements necessitated a second Senate vote, which occurred on March 26.

Opponents, including Rep. Lloyd Doggett (D-TX), argued the repeal creates a “loophole exploited by wealthy tax cheats, drug traffickers, and terrorist financiers.”

However, supporters countered that the rule’s compliance costs—estimated at 8 billion new paperwork filings—would stifle innovation.

The Senate’s final approval clears the path for President Trump’s signature, which advisors suggest could occur by March 28.

If enacted, the Congressional Review Act resolution would block the IRS from reinstating similar regulations.

Blockchain Association CEO Kristin Smith welcomed the Senate vote, stating the group looks forward to “taking this harmful rule off the books for good.”

Critics like Centrifuge’s Eli Cohen previously called the rule “unworkable in practice,” while former IRS Commissioner Charles Rettig warned it would “overwhelm the agency.”