The U.S. Senate has voted decisively to repeal a controversial IRS rule that would have required decentralized finance (DeFi) protocols to report transactions to tax authorities. With bipartisan support, the resolution now heads to President Donald Trump, who is expected to sign it into law.
Key Takeaways
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The Senate voted 70-28 to repeal the IRS DeFi broker rule.
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The rule was criticized as unworkable and burdensome for DeFi protocols.
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President Trump is likely to approve the resolution, signaling a shift in crypto regulation.
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The repeal reflects a growing bipartisan consensus on crypto policy.
Background of the IRS DeFi Rule
The IRS DeFi broker rule was introduced during the final days of the Biden administration. It aimed to expand existing reporting requirements to include decentralized exchanges, mandating that they disclose gross proceeds from cryptocurrency sales and the identities of taxpayers involved in these transactions. Critics argued that the rule was impractical and would stifle innovation in the rapidly evolving DeFi sector.
Senate Vote and Bipartisan Support
On March 4, 2025, the Senate voted 70-28 in favor of the resolution to repeal the IRS rule. This vote demonstrated significant bipartisan support, with 18 Democrats joining Republicans in favor of the repeal. The resolution had previously passed through the House of Representatives, where it was also met with favorable votes.
Senator Ted Cruz, who spearheaded the resolution, emphasized the need to protect American crypto entrepreneurs from overregulation. He stated that the heavy-handed federal rules could drive innovation and investment overseas, undermining the U.S. position in the global crypto market.
Implications for the Crypto Industry
The repeal of the IRS DeFi broker rule is seen as a significant victory for the crypto industry. Industry advocates argue that traditional reporting requirements are ill-suited for decentralized systems, which operate without central intermediaries. The resolution's passage is viewed as part of a broader effort to foster a more favorable regulatory environment for cryptocurrencies in the U.S.
Kristin Smith, CEO of the Blockchain Association, celebrated the Senate's decision, calling it a pivotal moment for DeFi and the U.S. crypto landscape. She noted that the repeal aligns with ongoing efforts to keep crypto innovation within the country and prevent companies from relocating to more favorable jurisdictions.
Next Steps
With the resolution now heading to President Trump’s desk, it is anticipated that he will sign it into law, further solidifying the shift in regulatory stance towards cryptocurrencies. Trump's administration has indicated a commitment to supporting the growth of the crypto sector, as evidenced by recent discussions about establishing a crypto reserve and meetings with industry leaders.
The Congressional Review Act, under which this resolution was passed, allows Congress to overturn regulations enacted in the final months of an outgoing administration. This mechanism has been utilized previously to roll back regulations perceived as overly restrictive, and the current bipartisan support suggests a growing consensus on the need for a more balanced approach to crypto regulation.
As the crypto industry watches these developments closely, the repeal of the IRS DeFi broker rule marks a significant step towards a more conducive environment for innovation and growth in the U.S. crypto market.
Sources
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President Warming Up His Pen to Sign Resolution to Kill IRS Crypto Rule If Passed, CoinDesk.
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Crypto Victory: Senate Votes to Kill "Unworkable" IRS DeFi Rule, Blockonomi.
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Resolution to kill IRS DeFi broker rule heads to Trump’s desk, Cointelegraph.
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