Crypto Quill

The US House of Representatives is set to vote today on a resolution to repeal the IRS’s controversial DeFi broker rules. This follows a decisive Senate vote last week, where lawmakers overwhelmingly supported rolling back the regulation. If the House vote succeeds, it could mark a major victory for the cryptocurrency industry in its ongoing battle against government oversight.

Strong Bipartisan Support for Repeal

The Senate’s 70-27 vote in favor of the repeal took many by surprise. Notably, several high-profile Democrats, including Senate Majority Leader Chuck Schumer and Senator Mark Warner, broke party lines to support the measure. Their backing signals a growing shift in Washington’s stance toward crypto regulations.

The House vote now stands as the final hurdle. Given the broad bipartisan support in the Senate, crypto advocates are optimistic. Lawmakers who oppose the rule argue that it is both legally flawed and practically unworkable. They claim it unfairly burdens developers of decentralized applications and blockchain protocols with compliance requirements they cannot realistically meet.

One lawmaker, speaking anonymously, said, “This rule was written without a proper understanding of how decentralized technology works. It’s like asking the internet itself to report user transactions.”

What the Rule Means for Crypto Developers

The IRS rule, initially introduced as part of the 2021 Infrastructure Investment and Jobs Act, classifies certain crypto developers and decentralized platforms as “brokers.” Under this definition, they would be required to collect and report transaction data on their users—something that’s nearly impossible in a decentralized financial system where transactions are often anonymous and do not rely on traditional intermediaries.

Critics argue that:

• Decentralized apps (DApps) don’t have central control – Unlike traditional brokers, DeFi platforms operate through smart contracts, not human intermediaries.
• Data collection is unfeasible – Many DeFi transactions occur on-chain, without a central authority to track them.
• Stifling regulation – Opponents warn that imposing traditional finance rules on DeFi could drive crypto innovation offshore.

However, IRS officials maintain that without such rules, DeFi could become a haven for tax evasion. Regulators worry that without reporting requirements, billions in taxable crypto transactions could go unaccounted for.

Crypto Industry and Trump Allies Back the Repeal

The push to roll back the regulation has drawn strong backing from crypto-friendly lawmakers and industry leaders. But it’s not just the usual crypto advocates speaking out—figures linked to former President Donald Trump’s administration have also weighed in.

David Sacks, a prominent tech investor and Trump White House AI and crypto adviser, publicly voiced support for the repeal. His endorsement has given additional political weight to the argument that overregulation could stifle the US’s position in the global crypto market.

This echoes concerns from many in the industry, who fear that if the IRS rule remains in place, blockchain startups and DeFi platforms could be forced to relocate to countries with friendlier regulations, such as Singapore or Switzerland.

One crypto executive, speaking on background, said, “We want to build in the US, but these policies make it impossible. If lawmakers don’t fix this, the innovation will leave.”

What Happens If the House Passes the Repeal?

If the House votes in favor today, the resolution will be final, effectively scrapping the IRS rule. Here’s what that would mean:

Scenario	Impact on Crypto Industry
House approves repeal	IRS rule is invalidated; DeFi developers won’t be required to report transactions.
House rejects repeal	The rule remains in effect, leading to potential legal challenges and non-compliance issues.

Even if the repeal passes, the debate over crypto regulation is far from over. Lawmakers on both sides have acknowledged the need for clearer guidelines on DeFi taxation and compliance. The question is whether future regulations will be more industry-friendly or continue the government’s efforts to clamp down on decentralized finance.

For now, all eyes are on the House as the crypto industry awaits what could be a major legislative win.