Attempt to Overturn IRS Cryptocurrency Rule Surmounts Ruling in U.S. Senate
Amid a split among Democrats, a Senate resolution to repeal an IRS rule targeting crypto brokers in the DeFi space passed overwhelmingly and now heads to the House of Representatives.
Jesse Hamilton | Edited by Aoyon Ashraf Updated Mar 4, 2025 23:40 UTC Published Mar 4, 2025 22:59 UTC
What you need to know:
- The U.S. Senate has voted by a landslide 70-27 to back efforts to exempt the decentralized finance sector from a new Internal Revenue Service (IRS) rule that industry officials say will be difficult to enforce.
- The House would still have to take similar action to repeal the recent rule.
With strong support from a number of Democrats, the U.S. Senate won Tuesday in its attempt to repeal the Biden administration's crypto tax rule, clearing perhaps the toughest hurdle yet to overturn the IRS's new broker rule that was intended to target decentralized finance (DeFi).
The Senate voted 70-27 to pass a resolution under the Congressional Review Act to repeal the IRS broker rule expansion as if it never existed. But the House would also need to follow with approval before President Donald Trump could sign the legislation.
Not only is the rule now removed from the regulations, but the IRS also loses the ability to implement similar policies in the future.
“DeFi is a microcosm of the crypto revolution,” Sen. Ted Cruz, the resolution’s sponsor, said in remarks on the Senate floor before the vote, calling the federal overreach “incoherent.” He argued that the rule, which treats software developers as brokers (and requires them to disclose user data and personal information), makes no sense. “Their software never holds or controls user funds.”
The Democratic support that helped secure the measure’s landslide victory (in Senate terms) echoed votes in previous sessions, such as the one to repeal the Securities and Exchange Commission’s cryptocurrency accounting rule. It demonstrates strong bipartisan support for digital asset issues, which could bode well for this year’s legislation on stablecoins and market structure laws that would formally bring cryptocurrency under federal oversight.
The DeFi Education Foundation described the Senate's action as “the first of many historic milestones in digital asset regulation in the United States.”
Cruz noted that, in addition to political trends where more Republicans are starting to support such cryptocurrency issues, support from Democrats showed another “clear dividing line,” showing that younger members of Congress are more likely to support these efforts than their older colleagues.
“Let's repeal this rule and free up the future,” Cruz said.
The House Financial Services Committee has already approved the resolution and recommended it for a House vote, which has not yet been completed. Earlier today, the White House said the president would likely sign the resolution quickly.
Cheyenne Ligon contributed to this report.
UPDATE (March 4, 2025, 23:39 UTC): Added comment from DeFi Education Fund.
