Senate Overturns IRS Crypto Tax Rule in Bipartisan Vote

In a major win for the crypto industry, the U.S. Senate voted 70-27 to repeal the Biden administration’s IRS broker rule, which sought to expand tax reporting requirements to decentralized finance (DeFi). The resolution, led by Senator Ted Cruz, now awaits a House vote before heading to the president for approval.

The controversial rule aimed to classify software developers as brokers, requiring them to report user data. Cruz criticized the move as government overreach, arguing that developers do not control user funds. The Senate’s decision, backed by strong bipartisan support, signals growing political momentum for crypto-friendly policies.

Democratic backing was crucial in overturning the rule, reflecting previous bipartisan efforts like the repeal of an SEC crypto accounting regulation. This trend suggests a broader shift toward regulatory clarity in digital assets, including stablecoins and market-structure reforms.

The House Financial Services Committee has already approved a matching resolution, with a final vote pending. The White House has signaled support, indicating a swift resolution. If enacted, the IRS would be barred from enforcing similar policies in the future.

The DeFi Education Fund hailed the Senate vote as a historic moment for digital asset regulation. Cruz emphasized that younger lawmakers, regardless of party affiliation, are increasingly supporting crypto innovation. "Let’s rescind this rule and unleash the future," he urged.

This decisive legislative action highlights the growing recognition of DeFi’s role in financial innovation. As crypto regulation gains traction in Washington, industry stakeholders are optimistic about clearer, more favorable policies ahead.