U.S. Lawmakers Voted to Cancel an IRS Rule That Required Crypto Companies

U.S. lawmakers voted to cancel an IRS rule that required crypto companies, including DeFi platforms, to collect and report taxpayer and transaction information.

U.S. lawmakers have voted to cancel an IRS rule requiring crypto companies, including DeFi platforms, to collect and report taxpayer and transaction information. The House of Representatives passed the vote on Tuesday with 292 in favor and 132 opposed.

The vote follows the Senate’s decision to reject the rule that was finalized during the final days of former President Biden’s administration. The vote could change how crypto businesses are regulated in the U.S.

The legislation now heads back to the Senate for another vote, as a resolution to cancel a rule must begin in the House due to a rule that budget-related bills must start there, explained Fox Business' Eleanor Terrett.

After the Senate approves the resolution again, it will go to President Trump’s desk as the first crypto-related bill to become law.

The House GOP whip reported that 70 Senators voted last week to overturn the IRS rule, and Trump’s advisers have reportedly urged him to sign it.

If the president signs the bill, the IRS would be blocked from enforcing similar rules in the future.

The administration finalized the rule in December, requiring crypto platforms to collect and report on transactions over $10,000 beginning in 2024. The rule also requires them to collect and report the taxpayer identification number for those transactions.

However, critics argued the rule would place a burden on crypto companies, especially decentralized finance platforms, to collect personally identifiable information that they don't possess. They also said it would ultimately harm U.S. technological innovation.

"This measure will strike a blow against the deep state bureaucracy and cancel another last-minute regulation from the Biden administration that would crush American innovation and create new economic problems," said Missouri Republican Jason Smith, the top Republican on the House Ways and Means Committee, who urged lawmakers to support the resolution.

"The administration's actions would devastate the crypto industry and set back technological progress in the U.S., especially in the fast-moving field of decentralized finance."

Smith said the rule might be impossible to enforce, especially on DeFi platforms. Unlike centralized crypto exchanges or banks, these platforms cannot gather the required user information to comply with the rule, he explained.

"The administration is trying to fit a square peg in a round hole by imposing a reporting requirement that assumes a traditional financial institution, like a bank or brokerage, despite the fact that DeFi platforms operate fundamentally differently," Smith said.

The resolution to cancel the rule passed the Senate last week with a vote of 70 to 28, with support from both parties. However, due to a technicality related to the order in which budget-related bills must be voted on, the Senate will need to vote on the resolution one more time before it heads to the president's desk.

During a heated debate on the House floor on Monday, lawmakers clashed over the implications of the rule.

Illinois Democrat Danny Davis, a member of the House Ways and Means Committee, said the rule was part of the 2021 Infrastructure Act, which lawmakers from both parties passed and President Biden signed into law.

"The Senate approved this resolution to cancel a last-minute rule from the Biden administration that would require crypto platforms to collect and report taxpayer information and transactions over $10,000 beginning in 2024," Davis stated.

"This measure is a special interest legislation that will help tax cheats, criminals, and terrorist financiers and add $4 billion to the national debt, directly contradicting President Trump’s goal to cut the debt."

Davis added that the administration finalized the rule in December, requiring crypto platforms to collect and report on transactions over $10,000 beginning in 2024, and to collect and report the taxpayer identification number for those transactions.

"The House Ways and Means Committee included an amendment to the 2021 Infrastructure Act to clarify that crypto platforms would be subject to the same reporting requirements as other financial institutions," Davis said.

"Like stock brokers, crypto platforms will be required to report the trades of their customers to the IRS. The new rule also directs the Treasury Department to work with the IRS to provide guidance to crypto companies on how to comply with the reporting requirements."

Davis said the rule will ensure "all taxpayers," including those in the crypto industry, "pay their fair share of taxes."

"The administration has acted to provide certainty to taxpayers and enforcers alike by adjusting the reporting threshold to $10,000, in line with the reporting threshold for cash transactions, and ensuring that the reporting requirements are tailored to the unique characteristics of the crypto industry," he added.

But North Carolina Republican Tim Moore, the top Republican on the House Budget Committee, claimed the administration overstepped its authority with the rule, which could ultimately harm U.S. innovation in digital assets.

"The administration's rule is a prime example of an administrative agency exceeding its authority and imposing an