The House of Representatives has approved a motion aimed at overturning a regulation that would have mandated decentralized finance (DeFi) protocols to report financial information to the Internal Revenue Service (IRS).
On March 11, the House voted 292 in favor and 132 against the initiative to abolish the so-called IRS DeFi broker rule, which sought to extend current IRS reporting obligations to cryptocurrency transactions.
All votes opposing the repeal came from Democrats, but notably, 76 members from the party allied with Republicans to support the repeal.
This decision follows a March 4 Senate vote on the repeal motion, which passed with a count of 70 to 27.
The regulation would have required DeFi platforms, like decentralized exchanges, to reveal gross sale proceeds from cryptocurrency transactions and disclose taxpayer identities involved in these activities.
After the vote, Republican Representative Mike Carey, who proposed the repeal motion, remarked, “The DeFi broker rule infringes on the privacy of millions of Americans, stifles growth in a crucial emerging industry, and would overwhelm the IRS.”
Representative Mike Carey addressing the media following the vote.
French Hill, Chairman of the House Financial Services Committee, also expressed his approval of the rule’s removal, deeming it “a prime example of government overreach that risks driving American digital asset innovation abroad.”
Before reaching the President, the resolution must pass another Senate vote, with indications that he would back the repeal.
Opposition to the repeal included Democratic Representative Lloyd Doggett, who criticized the move as granting a “special interest exemption” that facilitates tax evasion and money laundering for affluent Republican donors using decentralized exchanges.
He argued that abolishing the rule would create a “loophole” exploited by wealthy tax evaders, drug traffickers, and financiers of terrorism.
Related: US lawmakers push resolution to overturn ‘unjust’ crypto tax regulation
Earlier in March, David Sacks, the White House’s AI and cryptocurrency advisor, stated that the administration would back legislative efforts to repeal the DeFi broker regulation.
At that time, officials from the Office of Management and Budget commented that “This rule … would hinder American innovation and raise privacy issues concerning the disclosure of taxpayers’ sensitive information, while imposing an extraordinary compliance burden on American DeFi businesses.”
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