Senate Overturns IRS Rule on Digital Asset Sales

On Wednesday, the U.S. Senate passed a resolution to overturn an Internal Revenue Service (IRS) rule requiring brokers to report gross proceeds from digital asset sales. This decision represents a significant victory for President Donald Trump’s administration and advocates in the crypto industry.

The measure, introduced under the Congressional Review Act, passed with a 70-28 vote, showing strong Republican opposition to the rule and the surprising crossover support from many Democrats.

Kristin Smith, CEO of the Blockchain Association, remarked on the surprising number of Democrats willing to support the repeal, calling it “absolutely mind-blowing.”

The resolution now awaits passage in the House before it can reach Trump’s desk for final approval.

The IRS rule, finalized in December 2024 during the Biden administration’s final weeks, expanded the definition of a “broker” to include decentralized finance (DeFi) protocols. Critics argue that this would impose unmanageable compliance burdens on decentralized financial systems and force DeFi protocols to register as traditional financial brokers, requiring U.S. DeFi users to link their on-chain addresses to their identities.

A spokesperson for the DeFi Education Fund hailed this moment, stating, “Today marks the first of many historic milestones in the regulation of digital assets in the United States as we move towards standalone crypto legislation.” The group praised the bipartisan effort in the Senate to counter regulatory overreach and protect Americans’ freedom regarding their financial transactions.

The Trump administration endorsed the repeal on Tuesday, with David Sacks, Trump’s crypto policy chief, asserting that the previous rule would hinder American innovation and raise privacy concerns regarding taxpayers’ personal information, while imposing unprecedented compliance demands on DeFi companies.

Reporting contributed by Sander Lutz.