The U.S. House of Representatives has recently voted to repeal the IRS rule that requires DeFi platforms to report user transactions. The vote received bipartisan support.
IRS Rule Repeal
The repeal was approved by the House with a majority vote of 292 to 132. The rule mandated decentralized exchanges and other DeFi platforms to report transaction details to the IRS, including user information and gross proceeds from crypto sales.
Criticism of the Rule
House Ways and Means Committee Chairman Jason Smith described the rule as 'unfair' and 'unworkable,' highlighting that DeFi platforms cannot feasibly collect the necessary data for implementation. Representative Mike Carey condemned the measure as a 'massive government overreach' that threatened the privacy of many Americans and the growth potential of the industry. House Financial Services Committee Chairman French Hill echoed these concerns about government overreach possibly pushing digital asset innovation out of the U.S.
Future of Regulation
The House vote followed a similar decision by the Senate on March 4, where lawmakers also moved to strike down the rule. It will now return to the Senate for a final vote before being sent to President Trump for approval. In related legislative developments, Senator Bill Hagerty introduced an updated version of the GENIUS Act aimed at tightening regulatory standards for stablecoin issuers, potentially giving U.S. firms like Circle and Ripple an advantage.
The IRS DeFi rule repeal signals growing opposition in Congress to overregulation of the rapidly expanding DeFi industry. The focus remains on creating balanced rules that foster innovation while ensuring compliance.
