U.S. House Votes to Overturn IRS Crypto Reporting Rule, Citing Innovation Risks

The U.S. House of Representatives voted 292-132 to overturn an IRS rule classifying crypto entities, including decentralized finance (DeFi) platforms, as brokers, requiring them to collect taxpayer and transaction data. This move follows a similar Senate vote, advancing a resolution under the Congressional Review Act to block the rule, initially finalized at the end of President Joe Biden’s administration.

Missouri Republican Jason Smith, advocating for the resolution, warned that the IRS rule could stifle innovation and harm U.S. businesses. He argued that DeFi platforms, unlike centralized exchanges, lack the capability to collect user data as required by the rule.

Last week, 70 Senators backed overturning the rule, with senior advisers to former President Donald Trump recommending he sign the measure. However, due to budget procedures, the Senate must vote again before it reaches Trump’s desk. If signed, the IRS would be permanently barred from enforcing a similar rule.

Opposing the resolution, Illinois Democrat Danny Davis compared crypto to stocks, arguing that independent reporting increases tax compliance. Texas Democrat Lloyd Doggett criticized the measure, claiming it benefits tax evaders and criminal activities while adding $4 billion to the national debt—contradicting Trump’s stated fiscal goals.

North Carolina Republican Tim Moore contended that the rule exceeded congressional intent in the 2021 Infrastructure Investment and Jobs Act, placing an undue burden on developers and threatening U.S. leadership in blockchain innovation.

The House vote followed approval of a government funding bill (217-213), now headed to the Senate. If the crypto resolution clears the final legislative hurdle, it could mark a significant shift in U.S. crypto regulation, with long-term implications for digital asset innovation and tax enforcement.