The Senate dealt a decisive blow to the IRS on Monday, voting 70-27 to obliterate a controversial crypto reporting rule. The resolution, introduced by Senator Ted Cruz of Texas, leveraged Congressional Review Act authority to target an IRS rule that would’ve classified DeFi platforms as “brokers.” No small thing for the crypto world.
The December 2024 rule would’ve forced decentralized platforms to collect and report user data and transactions. Sounds simple enough, right? Not exactly. Critics argued it was technologically impossible for truly decentralized systems. You can’t report what you don’t—and can’t—know.
You can’t force code to collect what it literally can’t access. It’s like asking water to be dry.
The vote wasn’t even close. All Republicans plus 17 Democrats joined forces, a rare show of bipartisan agreement in today’s political climate. Turns out, politicians from both sides can agree on something after all. Shocking.
Crypto industry leaders were quick to celebrate. Blockchain Association popped the virtual champagne, while Coinbase’s CLO Paul Grewal highlighted the bipartisan nature of the vote. The a16z general counsel called it a “big win for DeFi developers.” No kidding.
The rule was slated to take effect in 2027, but now its fate hangs on House approval. The expanded definition would have impacted DEXs and wallet providers far beyond traditional brokers. The IRS proposal fundamentally conflicts with how consensus mechanisms validate transactions across distributed networks without central authority. The overturning of this rule protects DeFi innovation from unnecessary regulatory restrictions. Insiders say Trump’s administration supports killing the rule, with the White House AI/crypto czar signaling as much. If passed, it prevents the IRS from trying similar stunts in the future.
Beyond just saving DeFi platforms from an impossible compliance burden, the vote signals a potential shift in U.S. crypto regulation. It might even spark discussions on stablecoin and market structure laws. Congress showing it actually understands something about technology? Miracles do happen.
The vote also aligns with Trump’s deregulatory agenda and acknowledges crypto’s growing political importance. Remember when politicians couldn’t tell Bitcoin from a pet rock? Those days are fading.
Now all eyes turn to the House, where another vote could cement this victory for crypto advocates and position the U.S. to compete globally in blockchain innovation. Stay tuned.
