The U.S. House of Representatives has voted to repeal a controversial IRS rule that would have forced decentralized finance (DeFi) platforms to report transactions, dealing a blow to regulators’ efforts to oversee the industry.

On March 11, lawmakers voted 292-132 in favor of scrapping the so-called "IRS DeFi broker rule," which sought to expand reporting requirements to crypto exchanges and platforms. All 132 votes to keep the rule came from Democrats, though 76 members of the party joined Republicans in voting for its repeal. The move follows the Senate’s March 4 approval of the repeal, which passed 70-27.

The proposed rule would have required DeFi platforms, including decentralized exchanges, to disclose gross proceeds from crypto sales and provide information about users involved in transactions. Critics argued that this would violate privacy rights, stifle innovation, and place an undue burden on crypto companies.

Republican Representative Mike Carey, who introduced the repeal, stated that the rule “invades the privacy of tens of millions of Americans, hinders the development of an important new industry, and would overwhelm the IRS.” House Financial Services Committee Chairman French Hill also condemned the rule as an example of government overreach that could drive digital asset development overseas.

The repeal must pass another Senate vote before being sent to President Donald Trump, who has indicated his support.

Not everyone is celebrating the decision. Democratic Representative Lloyd Doggett argued that eliminating the rule creates a loophole for tax evasion, money laundering, and illicit financial activities, favoring wealthy donors. Meanwhile, White House AI and crypto czar David Sacks previously signaled that the administration supports rolling back the rule, citing concerns over privacy and its impact on American innovation.

With the crypto industry under growing regulatory scrutiny, the battle over DeFi oversight is far from over.