House Votes to Repeal IRS DeFi Reporting Rule
1min read The US House of Representatives has voted to repeal a controversial rule that would have required decentralized finance (DeFi) protocols to report user transactions to the Internal Revenue Service (IRS). The vote, which took place on March 11, saw 292 representatives in favor of the repeal and 132 against, with all opposing votes coming from Democrats. This decision follows a similar vote in the Senate on March 4, where the motion to repeal passed with a vote of 70 to 27.
The rule in question, known as the irs DeFi broker rule, aimed to expand existing IRS reporting requirements to include crypto transactions. It would have mandated defi platforms, such as decentralized exchanges, to disclose gross proceeds from crypto sales and provide information about the taxpayers involved. Critics of the rule argued that it invaded privacy, hindered industry development, and would overwhelm the IRS with compliance burdens.
Republican Representative Mike Carey, who submitted the repeal motion, emphasized the rule's invasive nature and its potential to stifle innovation. House Financial Services Committee Chairman French Hill echoed these sentiments, describing the rule as an example of government overreach that could drive digital asset development overseas. The resolution now awaits another Senate vote before being sent to the President, who has indicated support for its passage.
Opponents of the repeal, including Democrat Representative Lloyd Doggett, expressed concerns that the rule's reversal would create a loophole for tax evasion and money laundering. They argued that the rule was necessary to ensure transparency and compliance in the cryptocurrency sector. However, the bipartisan support for the repeal in both the Senate and the House underscores the growing recognition of the cryptocurrency industry's potential and the need for a balanced regulatory approach.
The repeal of the DeFi broker rule is expected to have significant implications for the cryptocurrency industry. DeFi platforms, which facilitate lending, borrowing, and trading of cryptocurrencies without intermediaries, have been at the forefront of innovation in the sector. The removal of onerous reporting requirements is likely to foster further growth and development in the DeFi space. However, it also raises questions about how the IRS will enforce tax compliance in the cryptocurrency sector, given the challenges it has faced in collecting taxes from crypto transactions.
The passage of the resolution reflects a broader debate within the US government about how to regulate the 
