Senate Votes to Repeal IRS DeFi Broker Rule, Awaits Trump’s Signature

TLDR

• The U.S. Senate voted 70-28 to repeal an IRS rule that would have required DeFi platforms to report taxpayer information
• The resolution now heads to President Trump, who is expected to sign it
• Critics argued the rule was “fundamentally unworkable” since DeFi platforms operate through automated code without human oversight
• The White House’s AI and crypto czar David Sacks has expressed support for killing the rule
• Industry groups like the Blockchain Association and DeFi Education Fund opposed the rule through lobbying and lawsuits

President Donald Trump is expected to sign a resolution that will repeal a Biden-era IRS rule requiring decentralized finance (DeFi) platforms to report taxpayer information. This comes after the U.S. Senate voted 70-28 on Wednesday to approve the measure, delivering a victory for crypto industry advocates.

The rule would have expanded the definition of “brokers” to include DeFi platforms. Under this definition, these platforms would need to collect and report information about users and their transactions to the IRS.

Critics of the rule argued it was impossible to implement. DeFi platforms operate through automated code on blockchains. They function without human intervention.

These platforms often have no way to identify their users. This makes compliance with traditional broker reporting requirements extremely difficult.

The resolution to overturn the rule passed with strong bipartisan support. Many Democrats joined Republicans in voting against the rule.

Industry Celebrates as Congressional Pushback Succeeds

The House of Representatives had earlier passed a similar resolution with a 292-132 vote. The measure needed to start in the House due to constitutional rules about budget matters.

There was some procedural delay in the process. The Senate initially passed a version of the resolution in early March.

However, the House cited constitutional concerns over how budget matters are handled. This led to a restart of the process with the House passing its own version.

Treasury Secretary Scott Bessent has indicated his office plans to work with the IRS and the Office of the Comptroller of the Currency. They aim to “rescind and amend” related crypto tax rules affecting digital asset firms.

The White House’s AI and crypto czar, David Sacks, has publicly supported the resolution. He stated that the Trump administration “strongly supports” the passage of the measure.

Industry groups have been fighting against the rule since it was introduced. The Blockchain Association, DeFi Education Fund, and Texas Blockchain Council filed a joint lawsuit in December.

These groups claimed the Treasury went beyond its authority by expanding the definition of “broker.” They argued that DeFi interfaces don’t control transactions or user funds.

Blockchain Association CEO Kristin Smith praised the Senate vote. She stated the group looked forward “to taking this harmful rule off the books for good.”

Not everyone supported repealing the rule. Democratic Representative Lloyd Doggett opposed the resolution. He argued it creates a “loophole that would be exploited by wealthy tax cheats, drug traffickers and terrorist financiers.”

Doggett called the repeal a “special interest exemption” from IRS disclosures. He claimed it would make tax evasion and money laundering easier.

The rule was part of the Biden administration’s effort to close tax gaps related to crypto transactions. It aimed to increase visibility into blockchain-based financial activity.

If President Trump signs the resolution as expected, the expanded definition of brokers will be formally removed from IRS enforcement policy. This would prevent DeFi platforms from having to implement traditional reporting requirements.

Industry experts believe this move aligns with the Trump administration’s more crypto-friendly approach. The administration has signaled its intention to support innovation in the blockchain space.