- The U.S. Senate passed S.J.Res.3 with a 70–27 vote, aiming to overturn an IRS rule requiring DeFi platforms to report digital asset transactions.
- The resolution, introduced by Senator Ted Cruz, now moves to the House of Representatives and then to President Trump for final approval.
- The Trump administration has strongly endorsed the repeal, citing concerns over innovation, privacy, and compliance burdens.
- The IRS rule, finalized in December 2024, classified DeFi platforms and crypto services as brokers, sparking widespread opposition from the crypto industry.
- If the resolution becomes law under the Congressional Review Act, the IRS will be barred from issuing a similar rule without Congressional approval.
- The repeal has garnered significant support from the crypto industry, with over 75 organizations backing the effort.
- Critics warn of potential tax compliance issues, with the IRS estimating $3.9 billion in lost revenue over the next decade.
- The Senate vote signals a broader shift in U.S. crypto policy, with deregulation and market freedom taking center stage.
A Turning Point for Crypto Regulation
The U.S. Senate’s decisive vote to repeal the IRS rule on DeFi platforms marks a pivotal moment in the ongoing debate over crypto regulation. The resolution, spearheaded by Senator Ted Cruz, reflects growing bipartisan support for a more innovation-friendly approach to digital assets. With a 70–27 vote, the Senate has sent a clear message: the U.S. government is rethinking its stance on decentralized finance (DeFi) and blockchain technology.
The Trump administration has thrown its full weight behind the repeal, framing the IRS rule as a relic of the previous administration. In an official statement, the White House described the regulation as a “midnight rule” that would stifle innovation, compromise taxpayer privacy, and impose excessive compliance burdens on American businesses. This strong endorsement underscores the administration’s broader pro-crypto agenda, which prioritizes deregulation and market freedom.
The IRS Rule: A Controversial Mandate
In December 2024, the IRS finalized a rule that classified DeFi platforms, custodial wallet providers, and other crypto services as brokers. This broad definition extended to software enabling access to DeFi protocols, requiring these entities to report users’ gross transaction proceeds. The IRS justified the rule as a measure to improve tax compliance and curb crypto-related tax evasion.
However, the crypto industry and lawmakers quickly pushed back, arguing that the rule was an overreach. Critics pointed out that DeFi’s decentralized nature makes it technically unfeasible to impose broker obligations on these platforms. They warned that such regulations could drive innovation out of the U.S., leaving the country at a competitive disadvantage in the global crypto market.
The Blockchain Association, a leading advocacy group, called the rule a “DeFi-killing” measure and urged Congress to act. Over 75 industry players, including major names like Coinbase, Kraken, and Uniswap, joined the call for repeal. Their collective efforts have highlighted the growing influence of the crypto industry in shaping U.S. policy.
The Congressional Review Act: A Path to Repeal
The repeal effort leverages the Congressional Review Act (CRA), a legislative ability that allows Congress to overturn executive regulations within a specific timeframe. If S.J.Res.3 becomes law, the IRS will be prohibited from issuing a similar rule unless Congress explicitly approves it. This mechanism provides a powerful check on regulatory overreach, ensuring that significant policy changes undergo thorough legislative scrutiny.
The resolution now moves to the House of Representatives, where it is expected to receive strong support from both Republicans and pro-crypto Democrats. If passed, it will be sent to President Trump, who is likely to sign it into law without delay. This timeline suggests that the repeal could be finalized by mid-to-late March 2025, marking a significant victory for the crypto industry.
Industry Reactions and Market Implications
The Senate’s decision has been met with widespread approval from the crypto community. Kristin Smith, CEO of the Blockchain Association, described the vote as a “big day for DeFi,” emphasizing the importance of bipartisan support in overturning a rule that could have crippled the industry. She expressed optimism about the future, noting that this victory could pave the way for more comprehensive crypto legislation, including stablecoin and market structure reforms.
Market analysts predict that the repeal will have a positive impact on the crypto sector, reducing regulatory uncertainty and encouraging investment. However, not everyone is celebrating. Some regulators and lawmakers have raised concerns about the potential for increased tax evasion and illicit activities. The IRS has estimated that repealing the rule could result in $3.9 billion in lost revenue over the next decade, highlighting the trade-offs involved in this policy shift.
A Broader Shift in U.S. Crypto Policy
The Senate vote is part of a larger trend toward deregulation in the U.S. crypto landscape. Under the Trump administration, the Securities and Exchange Commission (SEC) has scaled back its aggressive enforcement actions against crypto ventures, signaling a more hands-off approach. This shift aligns with the administration’s broader emphasis on market freedom and innovation.
At the same time, new initiatives like the proposed “Crypto Strategic Reserve” have sparked debate. While some see this as a bold move to position the U.S. as a leader in digital assets, others worry about the risks to market stability and taxpayer funds. The upcoming White House Crypto Summit on March 7 is expected to shed more light on these initiatives and the administration’s long-term vision for the industry.
Conclusion: A New Chapter for DeFi and Crypto
The Senate’s vote to repeal the IRS rule represents a watershed moment for the U.S. crypto industry. By rejecting a regulation that many viewed as overly burdensome and misaligned with the decentralized nature of DeFi, lawmakers have signaled a willingness to embrace innovation and adapt to the unique challenges of the digital asset space.
As the resolution moves to the House of Representatives and, ultimately, to President Trump’s desk, the crypto community is watching closely. If enacted, this repeal could set a powerful precedent for future regulatory debates, reinforcing the U.S. as a global leader in blockchain technology and decentralized finance. However, the road ahead is not without challenges, as policymakers must balance the need for innovation with the imperative of tax compliance and financial oversight.
