The recent decision by the U.S. Senate to overturn the IRS rule imposing new reporting requirements on decentralized finance brokers has been met with widespread support and relief from the crypto community. The Senate voted 70-27 in favor of overturning the rule, with both parties expressing opposition to the Biden-era regulation.
Senator Ted Cruz presented the motion, which was approved under the Congressional Review Act on Mar. 4. The IRS DeFi broker rule, introduced in December, had raised concerns among critics due to its impracticality. Decentralized platforms operate differently from traditional financial institutions, making it difficult for them to comply with the reporting requirements outlined in the rule.
Leading digital asset think tank Coin Center described the proposal as “technologically unfeasible,” highlighting the challenges faced by DeFi platforms in complying with the rule. Senate Majority Leader John Thune (R-S.D.) criticized the Biden administration for attempting to stifle financial innovation in the U.S., emphasizing the importance of restoring financial freedom for American citizens.
The resolution must now pass the House of Representatives before it can be delivered to President Donald Trump for final approval. If the rule is overturned, the IRS will be prohibited from enforcing it and enacting similar policies in the future.
Support for the repeal has come from industry associations like the Blockchain Association, which represents major cryptocurrency companies such as Coinbase, Kraken, and Uniswap Labs. They believe that avoiding unnecessary limitations on DeFi innovation is crucial for the growth of the industry.
The Senate’s decision to overturn the IRS rule is seen as a significant milestone in the regulation of digital assets in the U.S. It follows previous efforts to remove SEC accounting standards for digital assets and reflects a trend of bipartisan support for crypto-related legislation.
The ruling could pave the way for more comprehensive regulatory reforms, with legislation on stablecoins and cryptocurrency market structure expected to be on the agenda. A similar resolution has already been approved by the House Financial Services Committee, and a final floor vote is pending. President Trump is expected to sign the bill into law promptly once it reaches his desk.
Overall, the Senate’s decision to overturn the IRS rule is a positive development for the crypto industry, signaling a commitment to fostering innovation and growth in the digital asset space.