In a decisive blow to the Biden administration’s crypto tax plans, the House Ways and Means Committee voted 26-16 to advance a resolution repealing the controversial IRS DeFi tax rule. The measure now heads to the full House for consideration.
Republicans are leading the charge, but they’re not alone—bipartisan concerns about the IRS’s approach to DeFi taxation are growing by the day.
The rule, introduced in December 2024, would classify decentralized finance platforms as “brokers” for tax reporting purposes. Sounds reasonable? It’s not. These protocols literally can’t comply—they’re code, not companies with HR departments and filing cabinets.
Industry pushback has been swift and overwhelming. A whopping 75 major crypto firms signed onto the Blockchain Association’s letter urging Congress to kill the rule. Their message? This misguided regulation threatens innovation and would push DeFi development overseas. America loses, other countries win. Simple math.
Senator Ted Cruz isn’t waiting around. He’s already introduced a companion resolution in the Senate with 12 co-sponsors backing him up. Cruz’s resolution was successfully discharged from committee on February 12th through a petition process, clearing a key procedural hurdle.
Representative Mike Carey didn’t mince words, calling the rule a potential “nightmare” for both taxpayers and the IRS itself.
The stakes couldn’t be higher for the DeFi sector. Repealing the rule would preserve the decentralized model that makes these protocols revolutionary in the first place. User privacy stays intact. Innovation continues.
The alternative? Forced compliance with impossible standards or exodus to friendlier jurisdictions.
The repeal effort uses the Congressional Review Act—a legislative tool designed specifically to overturn recent agency rules. Both chambers need to approve it, then it’s off to the President’s desk. The clock is ticking on the 60-day window.
This showdown represents more than just a policy fight. It’s a test of the crypto industry’s growing political muscle and a potential template for future battles. Unlike fiat currency, cryptocurrency operates without central authority and many regulations are still being developed globally. Tax enforcement matters, but not at the cost of crushing an entire industry. Congress finally seems to get that.
