Senate Resolution to Overturn IRS DeFi Broker Rule

The Senate passed a resolution to overturn the controversial IRS DeFi broker rule with a 70–27 majority vote. The White House, signaling a strong pro-crypto stance during Trump’s administration, backed the repeal of this “midnight regulation.”

The Resolution’s Journey

The U.S. Senate voted 70–27 to pass S.J.Res.3, which overturns an IRS rule requiring DeFi platforms to report digital asset transactions. Introduced by Senator Ted Cruz, the resolution now heads to the House of Representatives for approval before reaching President Donald Trump.

A New Era for American Innovation?

The White House expressed firm support for the repeal, aligning with its broader pro-crypto stance. On March 4, the Trump administration issued an official statement endorsing the repeal and describing the regulation as a “midnight regulation” that would stifle innovation and raise privacy concerns regarding taxpayers’ personal information while imposing an unprecedented compliance burden on DeFi companies.

David Sacks, Trump’s AI & Crypto Czar, criticized the rule as an “11th-hour attack on the crypto community,” reinforcing the administration’s stance and sharing the White House statement on social media. This marks a clear shift in federal crypto policy, emphasizing deregulation and market freedom.

Real Reform or Political Ploy?

In December 2024, the IRS finalized a rule categorizing DeFi platforms, custodial wallet providers, and crypto services as brokers. This sweeping interpretation required them to report users’ gross proceeds from transactions, which the IRS argued would enhance tax compliance and tackle tax evasion. However, industry leaders and lawmakers opposed the rule, claiming it neglected DeFi’s decentralized nature and was technically unfeasible.

The Blockchain Association urged Congress to repeal what they termed the “DeFi-killing broker rule.” Over 75 industry members, including major players like Coinbase, Kraken, and Uniswap, have rallied in support of the repeal.

What Happens Next?

The repeal effort falls under the Congressional Review Act (CRA), allowing Congress to overturn executive regulations within a specified timeframe. If S.J.Res.3 becomes law, the IRS cannot issue a similar rule unless Congress approves it again. With strong Republican support and backing from pro-crypto Democrats expected in the House of Representatives, a timely passage is anticipated.

Market and Industry Reactions

The Senate’s decision has stirred optimism within the crypto industry, with analysts forecasting positive market responses due to reduced regulatory pressures. Kristin Smith, CEO of the Blockchain Association, praised the vote as a “big day for DeFi,” emphasizing the bipartisan support crucial for ending a rule that risked crippling the sector. However, some regulators expressed concerns about potential tax compliance issues, estimating that repealing the rule might lead to a $3.9 billion revenue loss over a decade.

A New Crypto Paradigm?

The Senate vote signifies a broader shift in Washington’s attitude toward crypto. The SEC has decreased its previous aggressive crackdown on the industry, reflecting the push toward deregulation. The administration’s proposal for a “Crypto Strategic Reserve” is generating both excitement and skepticism regarding its potential impact on market stability.

The forthcoming White House Crypto Summit on March 7 is likely to provide additional clarity on this pro-crypto agenda’s evolution.

Conclusion: All Eyes on the House

The House of Representatives is poised to vote on S.J.Res.3 in the coming weeks. If approved, President Trump will have ten days to sign it into law, with strong administration support likely ensuring its enactment by mid-to-late March 2025.