In a significant move for the decentralized finance (DeFi) industry, the U.S. House of Representatives has voted to overturn the Internal Revenue Service’s (IRS) controversial rule requiring DeFi platforms to report user transactions. The bipartisan vote, held on March 11, saw a 292-132 majority in favor of repealing the regulation, marking a major shift in U.S. crypto policy.
Bipartisan Support Against the IRS Rule
The motion to repeal the IRS DeFi broker rule received broad bipartisan backing, with 76 Democrats joining Republicans in supporting the measure. However, all 132 votes against the repeal came from Democrats. The rule, which would have mandated decentralized exchanges and other DeFi platforms to report user information and gross proceeds from crypto transactions to the IRS, faced widespread criticism from lawmakers and industry participants alike.
Concerns Over Compliance and Privacy
Opponents of the rule argued that it imposed an unreasonable compliance burden on DeFi platforms while also raising serious privacy concerns. Republican Representative Mike Carey called the regulation a “massive government overreach” that would have “invaded the privacy of tens of millions of Americans” and stifled innovation in the growing digital asset sector.
House Financial Services Committee Chairman French Hill echoed these sentiments, warning that excessive regulatory measures could push blockchain development overseas. He described the IRS rule as a “clear example of government overreach” that risked harming the United States’ leadership in financial technology.
Senate and White House Support for Repeal
The House vote follows the Senate’s earlier decision on March 4, where lawmakers struck down the rule with a 70-27 majority. This legislative pushback against the IRS’s approach to DeFi has gained traction across both chambers of Congress.
With both the Senate and House voting to repeal the rule, the resolution will now return to the Senate for a final vote before heading to President Donald Trump’s desk. The White House has already indicated its support for repealing the rule, increasing the likelihood that the measure will be signed into law.
Impact on the DeFi Industry
The repeal of the IRS DeFi broker rule would be a major victory for the crypto industry, particularly for decentralized exchanges and other blockchain-based financial platforms. By removing the obligation to report user transaction details, the decision is expected to ease regulatory pressure and encourage further growth within the sector.
While regulators continue to grapple with how to oversee the fast-evolving crypto space, the House and Senate’s actions indicate a shift towards a more balanced approach that seeks to protect innovation while addressing tax compliance concerns. The final decision now rests with the Senate and President Trump, both of whom have shown strong support for reversing the IRS rule.
