- The U.S. Senate repealed an IRS rule requiring DeFi platforms to collect user data, pending President Trump’s approval.
- Industry leaders and lawmakers argue the rule would harm DeFi, with critics warning it could push crypto innovation offshore.
- Treasury Secretary Scott Bessent pledged to collaborate with the IRS and regulators to improve U.S. crypto and digital asset laws.
The upper chamber of the U.S. Congress voted to repeal a crypto tax rule that the Biden administration signed in late December. In the most recent session, the U.S. Senate repealed the IRS rule that mandates decentralized platforms (DeFi) to collect and submit user information. The bill has now been forwarded to President Donald Trump, who is expected to approve it soon, as per White House Crypto A.I. and Crypto Czar David Sacks.
Congress Moves to Repeal Controversial IRS Rule on DeFi Tax Reporting
House members Rep. Mike Carey and Sen. Ted Cruz led the move to annul this IRS rule, finalized during the final days of the Biden era. According to the rule, DeFi firms must report tax returns, including “gambling winnings, rents and royalties” to tax authorities. The U.S. Treasury Department clarified that the rule applied to the primary service providers running the client-side websites rather than the DeFi protocols.
Following its finalization, the rule triggered an uproar among top industry players, with critics maintaining that it was unsustainable for the DeFi sector. They explained that DeFi protocols operated through automation and lack custodial authority. Industry leaders, including the DeFi Education Fund, challenged the IRS ruling in court, stressing that it could “push this entire, burgeoning technology offshore.”
Former SEC boss Hester Pierce was another vocal opponent of the IRS rule. Pierce argued that it would harm brokers who would be “transformed into dealers.” Some Democrats also expressed skepticism about the resolution. Representative Lloyd Doggett called the rule a “special interest exemption” by the IRS, adding that it would promote “tax evasion and money laundering.”
The pushback against the rule gathered pace in early 2025, when the U.S. lower chamber began steps for congressional action. Earlier this month, the Senate passed a resolution to undo the rule. The House also passed a parallel version of this bill which received bipartisan support from 292 lawmakers. Since this measure was classified as a budget provision, the legislative process required a final Senate approval before it could be forwarded to the president’s office.
Senate Bill Gains Industry Support as Key Step for U.S. Crypto Regulation
Several market commentators have backed the recent Senate bill. One such proponent is Blockchain Association CEO Kristin Smith, who hailed the resolution and indicated a willingness to assist in “taking this harmful rule off the books for good.”
The Fund’s executive director, Amanda Tuminelli, also praised the vote. She stated that the bill is a “crucial step towards protecting U.S. innovation” and a safe regulatory environment for developers to continue building “cutting-edge technologies.”
In a recent X post, Ron Hammond, senior director of government relations at the Blockchain Association, noted that this measure could become “the first crypto bill” signed by President Trump.
