US Senate Passes Resolution to Repeal Controversial IRS DeFi Broker Rule

The U.S. Senate has passed a resolution aimed at repealing a contentious IRS rule that would have required decentralized finance (DeFi) protocols to report transactions to the Internal Revenue Service (IRS). On March 4, the Senate voted 70-27 in favor of the resolution, signaling a strong move to dismantle the Biden-era regulation, which many in the crypto and DeFi communities have criticized as "unworkable."

The rule in question sought to expand existing IRS reporting requirements, mandating decentralized exchanges to disclose gross proceeds from cryptocurrency transactions, including identifying the taxpayers involved. Critics of the rule argued that it would impose unrealistic reporting burdens on decentralized platforms, which operate without traditional intermediaries.

The resolution now heads to the U.S. House of Representatives, where it will need to pass before being sent to President Donald Trump for final approval. Trump has indicated his support for repealing the rule, and the White House’s AI and crypto czar, David Sacks, has publicly backed the repeal effort.

This Senate vote follows a similar resolution advanced by House lawmakers on February 26, which is still awaiting a vote in the House. The push to repeal the rule has gained traction across the political spectrum, with many lawmakers seeing it as an important step in supporting the growing U.S. crypto industry.

Eli Cohen, General Counsel at the tokenizing platform Centrifuge, weighed in on the ruling, telling Cointelegraph that the rule had always been "unworkable" and did not make practical sense. However, he noted that since the rule never went into effect, it does not change any reporting requirements for taxpayers. "It just means that the taxpayer needs to report directly to the IRS without an intermediary taking on this obligation," Cohen explained.

Kristin Smith, CEO of the Blockchain Association, hailed the Senate vote as a significant victory for DeFi and the broader U.S. crypto industry. In a post on X (formerly Twitter), she celebrated the action, noting that it was a clear step in the effort to keep cryptocurrency development on U.S. soil.

“DeFi is an American strategic strength, and today’s action helps ensure it will continue to develop on home soil,” Smith said. She also emphasized that the passing of the resolution through the Senate marks the first time the pro-crypto sentiment within Congress has been translated into concrete action.

“This bodes well for future efforts to design and pass stablecoin and market structure legislation,” Smith added, signaling optimism for further positive developments in the U.S. crypto regulatory landscape.

The resolution’s passage through the Senate represents a pivotal moment for the crypto industry in the United States, with many seeing it as a sign of increasing legislative support for blockchain technology and decentralized finance. As the resolution moves to the House, all eyes will be on whether it can clear the final legislative hurdles and secure a full repeal of the controversial IRS rule.