- Senate passed a resolution to overturn the controversial IRS DeFi broker rule with a 70–27 majority vote.
- The White House backed repealing this “midnight regulation,” signaling a strong pro-crypto stance under Trump’s administration.
The U.S. Senate voted 70–27 to pass S.J.Res.3, overturning 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?
Furthermore, the White House expressed firm support for the repeal, aligning with its broader pro-crypto stance.
The Trump administration issued an official statement on the 4th of March, strongly endorsing the repeal of the IRS rule. The statement described the regulation as a “midnight regulation” from the previous administration that would,
“Stifle American innovation and raise privacy concerns over the sharing of taxpayers’ personal information, while imposing an unprecedented compliance burden on American DeFi companies.”
Source: X
Additionally, David Sacks, Trump’s AI & Crypto Czar, called the rule an “11th-hour attack on the crypto community” on X (formerly Twitter). He also shared the official White House statement, reinforcing the administration’s stance.
This marks a clear shift in federal crypto policy under Trump’s second term, emphasizing deregulation and market freedom.
Real reform or political ploy?
In December 2024, the IRS finalized a rule classifying DeFi platforms, custodial wallet providers, and crypto services as brokers.
This broad interpretation included “software providing access to DeFi protocols,” requiring them to report users’ gross proceeds from transactions.
The IRS argued the rule would improve tax compliance and reduce crypto-related tax evasion.
However, the crypto industry and lawmakers opposed it, calling it an overreach that ignored DeFi’s decentralized nature.
Critics warned that imposing broker obligations on DeFi protocols was technically unfeasible and could stifle U.S. innovation.
The Blockchain Association, a leading advocacy group, urged Congress to repeal the “DeFi-killing broker rule.”
Hedera [HBAR] joined 75+ industry members, including Coinbase, a16z, Paradigm, Kraken, Uniswap, and Anchorage Digital, in supporting the repeal.
What happens next for the Congressional Review Act?
The repeal effort falls under the Congressional Review Act (CRA), allowing Congress to overturn executive regulations within a specific timeframe.
Under CRA rules, if S.J.Res.3 becomes law, the IRS cannot issue a similar rule unless Congress approves it again.
The resolution now moves to the House of Representatives, where strong Republican support and pro-crypto Democrats’ backing are expected.
If passed, it will be sent to President Trump, who is anticipated to sign it into law immediately.
Market and Industry reactions
The Senate’s decision has sent ripples through the crypto industry, with analysts predicting positive market movements in response to reduced regulatory pressures.
Source: X
Kristin Smith, CEO of the Blockchain Association, described the vote as a “big day for DeFi”, noting that bipartisan support was crucial in killing a rule that “would have crippled DeFi in the U.S.”
“It’s a hopeful sign for bigger things to come from Congress. This is the most pro-crypto Congress ever and this effort was the first moment to convert that sentiment into action. This bodes well for the efforts to design and pass stablecoin and market structure legislation.”
However, some regulators and lawmakers have raised concerns over potential tax compliance issues. The IRS estimated that repealing the rule could result in $3.9 billion in lost revenue over a decade.
Critics argue that without proper oversight, the crypto industry could become a haven for tax evasion and illicit transactions.
Is this a new crypto paradigm?
Beyond tax reporting, the Senate vote highlights a broader pivot in Washington’s approach to crypto.
The SEC has slowed its once-aggressive clampdown on crypto ventures under the Trump administration, mirroring the push toward deregulation.
Meanwhile, the administration’s proposal for a “Crypto Strategic Reserve” has stirred both excitement and skepticism.
Will the U.S. government become a significant digital asset holder, or is this too risky for market stability and taxpayer dollars?
The upcoming White House Crypto Summit on the 7th of March will likely provide further clarity on how this pro-crypto agenda will unfold.
All eyes on the house: Will Trump seal the deal?
The House of Representatives is expected 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, the repeal is likely to be enacted by mid-to-late March 2025.
