US Senate Passes Resolution to Repeal IRS DeFi Broker Rules
The United States Senate voted on Wednesday to pass a resolution aimed at repealing the Internal Revenue Service (IRS) DeFi broker rules, which is expected to be signed into law by President Trump. This controversial cryptocurrency tax regulation was finalized just weeks before Trump’s administration took office, and the DeFi community has praised this move.
(Background: Significant Victory for DeFi: House of Representatives Votes to Repeal IRS DeFi Broker Rules)
(Context: US Senate Votes to Repeal DeFi Broker Rules, Trump Supports Decentralized Finance)
Details of the Senate Vote
The United States Senate voted 70 to 28 in favor of repealing the IRS DeFi broker rules. The resolution will be sent to President Trump, who is expected to sign it into law. David Sacks, White House AI and cryptocurrency czar, indicated that Trump’s senior advisory team has recommended his approval of this measure.
Senate Moves to Overturn IRS DeFi Broker Rules
Texas Republican Senator Ted Cruz and Ohio Republican Representative Mike Carey jointly introduced the resolution to overturn the DeFi broker rules, which were hastily finalized at the end of the Biden administration last December.
The IRS’s regulations regarding DeFi brokers stem from tax reporting requirements derived from the Infrastructure Investment and Jobs Act, passed in 2021. The final regulations are set to be officially published on December 27, 2024, and are expected to take effect on January 1, 2027.
Under these rules, certain “DeFi industry participants” would be required to collect and report user transaction data akin to traditional securities brokers. Additionally, they would be mandated to issue 1099 tax forms to users to report non-employment income such as gambling winnings, rents, and royalties.
The U.S. Department of the Treasury explained that this final rule targets “front-end service providers who directly interact with customers,” aiming at entities operating the main websites that connect to DeFi protocols, rather than the protocols themselves.
On March 4, the White House issued a statement criticizing the rule as a “midnight regulatory action by the previous administration,” warning that it poses significant threats to privacy.
Industry Response
The Senate had previously voted earlier this month in support of overturning the rule, followed by the House of Representatives. However, since the bill was tied to budget provisions, it required another Senate vote before being sent to Trump for signing.
The initial rollout of this rule triggered a strong backlash within the industry. Organizations such as the DeFi Education Foundation immediately sued the IRS after the rule was published, warning that it would “drive the entire emerging technology industry overseas.”
Amanda Tuminelli, Executive Director of the DeFi Education Foundation, stated on Wednesday that overturning this rule is a “crucial step to protect American innovation and ensure developers can continue to build cutting-edge technology without the burden of vague and overreaching regulatory pressure.” She praised Congress for its “bipartisan overwhelming majority” in recognizing the serious and far-reaching consequences of the IRS’s erroneous legislation.
