The House Ways and Means Committee dealt a heavy blow to controversial crypto regulations Wednesday, voting 26-16 to advance a resolution repealing the IRS’s December 2024 DeFi tax rule. The measure now heads to the full House for consideration and, if approved, would prevent the implementation of rules scheduled to take effect in 2027.
The IRS rule, which many crypto enthusiasts absolutely hate, would classify decentralized finance (DeFi) projects as brokers for tax reporting purposes. Not cool. Republican lawmakers have rallied against what they describe as an “unfair and unworkable” regulation, with Rep. Jason Smith leading the charge in the House while Sen. Ted Cruz pushes a similar resolution in the Senate.
The IRS wants DeFi classified as brokers, but crypto fans and GOP lawmakers are fighting back against this regulatory overreach.
It’s not just politicians making noise. The crypto industry came out swinging against the rule. A whopping 75 companies—including heavy hitters like Coinbase, Kraken, and Uniswap—signed a Blockchain Association letter opposing the regulation. Their argument? The rule fundamentally misunderstands how DeFi technology works. Shocking, right?
Democrats, predictably, defended the regulation. Rep. Richard Neal emphasized the importance of tax compliance, arguing the rule prevents crypto investors from dodging their obligations. Crypto users argue that DeFi’s appeal comes from personal asset control without reliance on traditional financial intermediaries. They claim repealing the regulation would cost about $3.9 billion in lost tax revenue over the next decade. Money talks.
The resolution uses the Congressional Review Act, which requires majority approval in both chambers plus a presidential signature to overturn the regulation. The bill specifically addresses concerns that the IRS rule oversteps its authority by extending beyond traditional broker definitions. The resolution has been officially identified as H.J.Res. 25 in congressional documents. If successful, it would prevent similar rules from being reintroduced. That’s a big deal.
The IRS rule would force DeFi platforms to produce Form 1099 tax documents for users—creating an estimated 8 billion new pieces of paperwork. Even a former IRS Commissioner raised concerns about the burden. Talk about bureaucratic overkill.
This showdown highlights the growing tension between regulators and the crypto industry. It’s a test of the sector’s influence in Congress and could signal a shift in how the U.S. approaches digital asset oversight. The stakes? Only the future of DeFi innovation in America.
