US lawmakers in the House of Representatives have advanced a resolution to repeal the “DeFi broker rule,” requiring brokers to report digital asset transactions to the Internal Revenue Service.
Set to take effect in 2027, the IRS regulation approved on Dec. 5 would expand existing reporting requirements to include decentralized exchanges and require brokers to disclose gross proceeds from sales of cryptocurrencies , including information regarding taxpayers involved in the transactions.
During its Feb. 26 committee markup, the House Ways and Means Committee, a key group within the US House of Representatives that deals with financial issues, voted 26 to 16 to pass the resolution .
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In a statement, Miller Whitehouse-Levine, the CEO of DeFi advocacy group the DeFi Education Fund , said the rule is an “unlawful and unconstitutional overreach” and needs to be overturned to “protect Americans’ freedom of choice in how they transact.”
“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,” he said.
If the resolution passes through the House, it then moves to the Senate, and if it is passed there, it would then be sent to US President Donald Trump to either veto or sign into law.
Ways and Means Committee Chairman Jason Smith said in a Feb. 26 statement that the legislation, implemented during former President Joe Biden’s final days in office, “could stifle America’s digital asset leadership.”
“Not only is it unfair, but it’s unworkable. DeFi brokers do not even collect the information from users needed to implement this rule,” he said.
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“Former IRS Commissioner Charles Rettig publicly stated that this regulation would create a blizzard of paperwork that the IRS can neither handle nor administer in an efficient and effective way,” Smith added.
Smith claims the IRS stretched its directives from Congress in 2021 to unnecessarily regulate the providers of digital wallets , which has only benefitted foreign crypto firms exempt from the requirements.
“The losers are the roughly one in four Americans who own cryptocurrency,” he said.
Hundreds of pro-crypto candidates won seats in Congress, and the Republican Party’s majority control of the US Senate and House has led to speculation by industry leaders that the US government might become the most pro-crypto in history .
The change in leadership has already seen many positive developments in the crypto space, including the United States Securities and Exchange Commission ending multiple cases against crypto firms throughout February.
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