TLDR
- Senate voted 70-28 to repeal Biden-era IRS rule requiring DeFi platforms to report taxpayer information
- Critics argued the rule was “fundamentally unworkable” as DeFi platforms operate through automated code without human oversight
- House passed a parallel version with a 292-132 bipartisan vote earlier in March
- Treasury Secretary Scott Bessent is working with IRS and OCC to “rescind and amend” related crypto tax rules
- The White House, through crypto czar David Sacks, has expressed strong support for repealing the rule
The Path to Repeal
The U.S. Senate voted 70-28 on Wednesday to support a resolution that would repeal a controversial Biden-era IRS rule. The rule would have required decentralized finance (DeFi) platforms to collect and report taxpayer information.
The resolution is now headed to President Donald Trump’s desk. He is expected to sign it into law.
The Senate vote marks the final step in a months-long effort to overturn the regulation. The House of Representatives passed its version of the resolution earlier this month with a strong bipartisan turnout of 292-132.
This resolution falls under the Congressional Review Act. This law allows Congress to overturn recently issued federal regulations.
The Senate had previously passed a version of the resolution in early March. However, a “blue slip” issue arose when the House cited constitutional concerns over how budget matters are handled.
The House argued that the repeal should have started with them. This led to the House creating its own parallel version of the resolution.
Why the Rule Faced Opposition
Critics of the IRS rule have consistently argued that it was “fundamentally unworkable.” They point out that DeFi platforms operate through automated code on blockchains.
These platforms function without human intervention. They also lack visibility into user identities.
The rule was criticized for its language about “DeFi brokers” as “front-end service providers” for digital asset transactions. Many felt this definition was too broad.
Commissioner Hester Pierce condemned the rule in February last year. She warned it would harm market participants who found themselves “transformed into dealers” without realizing it.
Crypto lobbyists sued the SEC last April over the broad language. The DeFi Education Fund warned that such requirements would “push this entire, burgeoning technology offshore.”
1/🚨 New “Broker” CRA Milestone 🚨
With *another* bipartisan super majority of 70 Senators, Congress has repealed the IRS “broker” rule requiring DeFi front-ends to KYC users – ultimately reaffirming that Americans should have the freedom to decide how they transact. pic.twitter.com/AOZttE9Sio
— DeFi Education Fund (@fund_defi) March 27, 2025
White House Support
The Trump administration has thrown its full support behind the repeal effort. This support came as early as March 4 when the Senate first moved to overturn the rule.
David Sacks, Trump’s crypto policy chief, stated that the White House “strongly supports” the passage of the resolution. This marked the first time the Trump administration explicitly weighed in on pending crypto policy.
U.S. Treasury Secretary Scott Bessent has also been active on this front. He announced that his office is working closely with the IRS and Office of the Comptroller of the Currency.
Their goal is to “rescind and amend” related crypto tax rules. These rules had impacted how crypto and digital asset firms do business in the United States.
The Blockchain Association has applauded the Senate vote. CEO Kristin Smith said the group looked forward “to taking this harmful rule off the books for good.”
Eli Cohen, general counsel of the RWA tokenizing platform Centrifuge, stated that the rule never made “any sense and was unworkable in practice.” This echoed the sentiments of many in the crypto industry.
Opposition to the Repeal
Not everyone supports repealing the rule. Democratic Representative Lloyd Doggett has been vocal in his opposition.
Doggett claimed before the House vote that the repeal creates a “special interest exemption” from IRS disclosures. He argued this “makes tax evasion and money laundering so much easier.”
He suggested the repeal would create a “loophole that would be exploited by wealthy tax cheats, drug traffickers and terrorist financiers.” This view represents concerns about potential misuse of DeFi platforms.
The vote breakdown shows that while Republicans were largely united against the rule, many Democrats also crossed the aisle to support the repeal. The final Senate vote of 70-28 demonstrates the broad support for overturning the regulation.
The measure has now completed its journey through Congress. President Trump is expected to sign it soon, officially removing the controversial reporting requirements for DeFi platforms.
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