A Landmark Vote on Cryptocurrency Regulation
In a significant move for the cryptocurrency community, a majority of lawmakers in the U.S. House of Representatives voted to overturn an IRS rule that classified certain crypto entities as brokers. This rule required these entities, including decentralized finance (DeFi) platforms, to gather specific taxpayer and transaction information. The decision reflects a growing concern among lawmakers about the implications of such regulations on innovation in the digital asset space.
Bipartisan Support for Change
The vote concluded with a decisive 292-132 outcome, showcasing strong bipartisan support for the Congressional Review Act resolution aimed at nullifying the controversial IRS rule. This action follows a similar sentiment expressed in the U.S. Senate, where lawmakers previously indicated their intention to reject the rule finalized during the closing days of the Biden administration.
Concerns Over Innovation and Feasibility
Leading the charge, Missouri Republican Jason Smith urged his colleagues to support the resolution, emphasizing that the IRS rule could negatively impact U.S. businesses and discourage innovation within the crypto sector. He raised critical questions regarding the feasibility of implementing the rule, stating, “DeFi exchanges are not the same as centralized crypto exchanges or traditional banks or brokers. DeFi platforms do not and cannot even collect the information from users needed to implement this rule.”
Senate Approval and Presidential Support
Last week, the Senate demonstrated its commitment to overturning the IRS regulation with a vote of 70 in favor. Additionally, senior advisers to former President Donald Trump have recommended that he sign the provision if it receives Senate approval again due to budgetary constraints. If the resolution is passed and signed into law, the IRS would be prohibited from imposing a similar rule in the future.
Diverging Opinions Among Lawmakers
Not all lawmakers are in agreement regarding the resolution. Illinois Democrat Danny Davis voiced opposition, pointing out that the IRS regulations were rooted in the 2021 bipartisan Infrastructure Investment and Jobs Act. He drew a parallel between cryptocurrency transactions and stock trading, noting that brokers are required to report sales proceeds to the IRS, which encourages taxpayers to report their income accurately.
Discontent with Regulatory Overreach
North Carolina Republican Tim Moore echoed concerns about the IRS rule, arguing that it exceeds the original intentions of Congress as outlined in the 2021 law. He stated, “This rule has placed impossible burdens on software developers, threatening American leadership in digital asset innovation.”
On the other hand, Texas Democrat Lloyd Doggett criticized the resolution as “special interest legislation,” warning that it could be misused by wealthy tax evaders and illicit actors, potentially adding $4 billion to the national debt—an outcome that contradicts the goals expressed by President Trump regarding debt reduction.
Funding the Government Amid Regulatory Changes
The vote on the IRS resolution followed the House’s approval of a continuing resolution to fund the U.S. government through September 30, 2025, which passed narrowly with 217 votes in favor and 213 against. This funding measure will now move to the Senate for further consideration.
In summary, the House’s decision to overturn the IRS DeFi broker rule marks a pivotal moment in the ongoing dialogue about cryptocurrency regulation in the United States, highlighting the delicate balance between regulatory oversight and fostering innovation in the rapidly evolving digital asset landscape.
