US House Overturns IRS DeFi Rule in Landmark Vote

The U.S. House of Representatives has voted decisively to repeal a controversial IRS rule that would have forced DeFi platforms to disclose transaction details. In a 292-132 vote on March 11, lawmakers moved to nullify the regulation, which was widely criticized for threatening privacy and stifling innovation in the digital asset space.

This follows the Senate’s earlier decision on March 4, where the repeal motion also passed with a significant majority of 70 to 27. If enforced, the IRS rule would have classified DeFi protocols as brokers, requiring them to report gross proceeds from crypto sales and identify individuals involved in these transactions.

Republican Representative Mike Carey, who led the repeal effort, described the rule as an “invasion of privacy” that would not only burden tens of millions of Americans but also drive crypto innovation away from the U.S.

“This was an unnecessary and overreaching regulation that would have overwhelmed the IRS while discouraging growth in a critical sector,” Carey stated after the vote.

Bipartisan Support, but Sharp Divisions Remain

The vote saw notable bipartisan backing, with 76 Democrats breaking ranks to support the repeal alongside Republicans. However, all 132 votes against repealing the rule came from Democratic lawmakers, highlighting a divide in how lawmakers view government oversight in the crypto industry.

House Financial Services Committee Chairman French Hill echoed concerns over the rule’s impact, arguing that it would “push American digital asset development overseas” by imposing regulatory hurdles on an already evolving industry.

On the opposing side, Democratic Representative Lloyd Doggett strongly criticized the repeal, arguing that it would create a loophole for tax evasion and illicit activities. “This exemption makes tax evasion and money laundering much easier for wealthy Republican donors who have been using these decentralized exchanges,” Doggett claimed.

White House Signals Support for Repeal

The resolution now awaits another Senate vote before being sent to President Donald Trump, who has signaled his approval. Earlier in March, White House AI and crypto czar David Sacks voiced support for Congress’ decision to strike down the rule, citing concerns over privacy and regulatory overreach.

The Office of Management and Budget also weighed in, arguing that the IRS rule would “stifle American innovation” while placing an “unprecedented compliance burden” on DeFi platforms. With the White House leaning toward repeal, the final steps of the legislative process could soon make this rollback official.