In a bipartisan move, the U.S. Senate has voted overwhelmingly to overturn an IRS rule that would have imposed strict reporting requirements on decentralized finance (DeFi) brokers. The decision marks a significant shift in regulatory approaches toward digital assets.

Senate Strikes Down Controversial IRS Rule

A bipartisan majority rejects tax reporting requirements for DeFi platforms.

On March 4, the Senate voted 70-27 in favor of repealing the IRS rule that sought to expand the definition of “brokers” to include decentralized finance platforms. Introduced in December, the rule would have required DeFi platforms to report user data for tax compliance, a measure critics deemed unworkable.

The repeal, sponsored by Senator Ted Cruz and passed under the Congressional Review Act, highlighted bipartisan opposition to what many viewed as a burdensome regulatory measure. Business Insider reports that lawmakers from both parties recognized the impracticality of enforcing traditional financial regulations on decentralized platforms.

Industry and Lawmakers Push Back

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Critics argue the IRS rule was technologically unfeasible and stifled innovation.

Decentralized platforms do not operate like traditional financial institutions, making compliance with the IRS reporting rule highly impractical. Coin Center, a digital asset policy group, labeled the measure “technologically unfeasible.”

Senate Majority Leader John Thune reinforced this sentiment, stating, “The Biden administration did everything it could to stifle financial innovation in the United States. The Senate is working to undo these burdensome regulations one at a time to restore financial freedom for the American people.”

Crypto advocacy groups also backed the repeal. The Blockchain Association, representing major crypto firms like Coinbase, Kraken, and Uniswap Labs, argued that the regulation would have placed unnecessary restrictions on DeFi growth. Similarly, the DeFi Education Fund hailed the Senate’s decision as a historic milestone in digital asset regulation.

Next Steps: House Vote and Presidential Approval

The resolution now moves to the House, where it is expected to pass.

Although the Senate’s decision is a major win for DeFi, the resolution must still clear the House of Representatives before reaching President Donald Trump’s desk for final approval. If signed into law, not only will the IRS be blocked from enforcing the rule, but it will also be prohibited from introducing similar policies in the future.

A similar resolution has already been approved by the House Financial Services Committee, signaling strong congressional support for the repeal. According to White House statements, President Trump is expected to sign the bill into law as soon as it reaches his desk.

Broader Implications for Crypto Regulation

The Senate vote could set the stage for further legislative reforms in the crypto industry.

This move follows previous efforts to challenge Securities and Exchange Commission (SEC) accounting standards for digital assets and represents a growing bipartisan consensus on crypto-related regulations.

Lawmakers are expected to continue addressing key issues in crypto policy, including stablecoin regulation and broader market structure legislation. The Senate’s decision signals a shift toward more industry-friendly policies and could pave the way for a clearer regulatory framework for digital assets in the United States.