House Votes to Repeal Incoming IRS Rule To Protect the Future of US DeFi Industry

• A House committee has moved to repeal the IRS’ proposed tax reporting rules for DeFi.
• The tax rules, introduced in December 2024, were set to take effect in 2027.
• The resolution must pass both the House and Senate and receive presidential approval to be enacted.

Donald Trump’s administration is pushing to roll back regulatory hurdles imposed on the crypto industry, with the latest target being the Internal Revenue Service’s (IRS) tax reporting rules for decentralized finance (DeFi).

Congress has initiated  a resolution to overturn the rules, which were introduced under Joe Biden’s administration and faced sharp criticism from industry leaders.

If successful, the repeal would remove reporting requirements that many argue are “unfair” for decentralized protocols.

House Committee Moves To Block IRS DeFi Tax Rules

The U.S. House of Representatives has taken the first step in challenging the IRS’ proposed tax policy on DeFi transactions.

The House Ways and Means Committee, which oversees the Treasury Department and its agencies, voted 26-16 to advance a resolution under the Congressional Review Act.

The measure seeks to repeal the IRS’ rule requiring brokers, including decentralized exchanges, to report digital asset transactions beginning in 2027.

The resolution must pass both chambers of Congress and receive approval from the president for it to take effect.

Rep. Mike Carey (R-Ohio) warned that the IRS policy would overburden tax authorities and create unnecessary complications for American taxpayers.

However, Rep. Richard Neal (D-Mass.) defended the measure, arguing that repealing the rule would weaken tax enforcement and allow crypto investors to evade reporting their earnings.

IRS DeFi Rules Spark Industry Backlash

The IRS regulation sought to extend traditional broker reporting requirements to DeFi platforms, requiring them to track and report user transactions to tax authorities.

The Blockchain Association swiftly  challenged the rules in court , arguing that they placed undue compliance burdens on software developers who create decentralized trading services.

The association contended that enforcing such rules would stifle innovation and restrict entrepreneurs building in the crypto space.

The crypto industry had widely expected a regulatory challenge under the Trump administration, with many predicting the IRS rule would ultimately be overturned.

If repealed, the decision would mark a significant victory for the DeFi sector , preserving its decentralized model.

Critics of the IRS rules argued that strict transaction monitoring requirements conflicted with DeFi’s core principles and could have forced many protocols to alter their operations or relocate outside the U.S.