Updated Mar 3, 2025 4:58 AM UTC Published Mar 3, 2025 1:00 AM UTC
The US Senate is set to vote this week to repeal an Internal Revenue Service (IRS) rule that the crypto industry poses a serious threat to decentralized finance (DeFi), according to a person familiar with the matter.
The Internal Revenue Service’s (IRS) attempt in December to expand the list of brokers required to disclose certain tax information has created confusion for DeFi projects, and some senators are looking to use the Congressional Oversight Act to eliminate that rule, as well as another emergency regulation: the Consumer Financial Protection Bureau’s rule on digital payment apps.
Sen. Ted Cruz has sponsored a CRA resolution to overturn the IRS action, and Sen. Pete Ricketts is supporting a CFPB resolution. Both are set for consideration this week, the person said.
“The Biden administration has done everything it can to stifle financial innovation in the United States by threatening to send digital asset companies overseas,” Majority Leader John Thune said in a statement. “The Senate is working to repeal these onerous regulations one at a time to restore financial freedom to the American people.”
Last week, the House Financial Services Committee moved to bring the IRS resolution to the House floor for a vote, and the Senate move will give further impetus to the effort, which must be approved by both chambers and signed by the president before becoming law.
“At midnight, the Biden administration released its decentralized finance rule, which will immediately and directly harm American cryptocurrency innovation and promote it overseas,” said Cruz, a Texas Republican leading the fight against the IRS rule. “This week, Congress will vote on my resolution to repeal this rule. I am confident we will do so.”
Such rollbacks of federal agency rules must be accomplished within a tight timeframe, as the rollback process is governed by deadlines set in the CRA, which are based on a limited number of legislative days from the date each regulation is approved. As in President Donald Trump’s first administration, his second administration has also placed a high priority on rolling back some of the previous administration’s regulatory rules.
The CFPB’s rule requires big tech companies that provide digital wallets and payment apps and process significant volumes of consumer payments, such as Apple, Amazon and Google, to be subject to stricter regulation, similar to what is done to big U.S. banks.
“After losing the election, the CFPB under the Biden-Harris administration rushed to pass a last-minute rule to attack unbanked digital consumer payment apps,” Sen. Ricketts, a Republican from Nebraska, said in a statement. “This one-size-fits-all solution in search of a problem unnecessarily expands the CFPB’s authority. Our legislation removes barriers to innovation, cuts red tape, and supports our job creators.”
The two rules, finalized in the final days of President Joe Biden’s administration, came from two organizations that were controlled by Republican lawmakers: the IRS and the CFPB. Taxation of the United States was a major priority for the new administration, as was the party’s goal of sidelining the consumer protection regulator.
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