The U.S. Senate, on March 26, 2025, voted to do away with an Internal Revenue Service (IRS) regulation that would have obligated decentralized finance (DeFi) platforms to report user transactions. The resolution, which passed in a 70-28 bipartisan vote, is now headed to President Donald Trump’s office, who is expected to sign it into law. If this resolution is signed into law, the repeal could have wide-ranging effects for the cryptocurrency market and the future of financial regulation in the United States.

This IRS rule, which was created under the Biden administration as part of the 2021 Infrastructure Bill, aimed to include DeFi platforms in the definition of brokers and require them to report their user transactions. Supporters of this rule said it would improve tax compliance and prevent loopholes in digital assets. However, critics argued it would unfairly burden decentralized platforms, which do not operate like regular banks.

Bipartisan Opposition to IRS Rule

Legislators from both parties were in opposition to the IRS rule, as they claimed that DeFi platforms, which do not have any centralized intermediaries, could not possibly comply. Senator Ted Cruz (R-TX) and Representative Mike Carey (R-OH) sponsored the repeal bill under the Congressional Review Act, which permits Congress to reverse federal regulations by majority vote. The Senate first voted to cancel the IRS rule on March 4, with 70 in favor and 27 against. Because budget-related rules require a different process, the House created its version and passed it with 292 votes to 131. The Senate then approved this House version, showing strong support from both parties.

Reactions From The Crypto World

Market indicators reflect very positive sentiment following the Senate decision. Bitcoin’s Relative Strength Index (RSI) hit 72 at 15:20 UTC, reflecting high buying pressure, while Ethereum’s RSI also rose by 3.8% from $3,200 to $3,320 at the same hour. The rule change is regarded as welcome news for the DeFi market, resulting in increased trading across different platforms. The cryptocurrency industry also praised the Senate’s decision, calling it a big victory for decentralized finance. The Blockchain Association, which represents 76 crypto companies, strongly pushed for the repeal. They argued that the rule was not practical and would require DeFi platforms to collect user data, which is technically impossible for decentralized systems. Supporting the move, the CEO of the Blockchain Association, Kristen Smith, was quoted by the X handle of the Blockchain Association in one of their posts. She said:

“Following its second bipartisan vote in the Senate, the Congressional Review Act resolution to roll back the DeFi-killing broker rule now moves to President Trump’s desk for a final signature. We look forward to taking this harmful rule off the books for good. Thank you to Senator Cruz, Representative Carey, and all of the pro-innovation members who voted to strike down the DeFi broker rule. Following President Trump’s signing, American DeFi and crypto innovators and developers can get back to building the next generation of our internet and financial infrastructure.”

Those who support the repeal say that canceling the IRS rule will ease unnecessary regulations on DeFi platforms, allowing more innovation and growth in the U.S. crypto industry. One of the crypto enthusiasts and investor, Dom Gambardello posted on his X account that this move “is BULLISH—less regulation, more growth, as we’ve been saying.” 

On the other hand, critics argue that repealing the rule could make tax evasion easier and hinder efforts to fight illegal activities in the digital asset space. Democratic Representative Lloyd Doggett opposed the resolution. Before the House vote earlier this month, he said it was a “special favor” that exempts certain groups from IRS rules. He argued that it would make tax evasion and money laundering easier, especially for wealthy Republican donors using decentralized exchanges.

What Next?

The Senate’s repeal of the IRS DeFi broker rule is a watershed moment in the convergence of cryptocurrency and regulatory policy. While it is a legislative affirmation of the promotion of innovation in the growing DeFi market, it also poses important questions regarding how to balance innovation with the necessity for effective regulation and tax compliance in the digital era.

The repeal now waits only for President Trump’s signature to become a law. Given the constructive approach of his administration toward the crypto space, it is anticipated that he will sign the repeal shortly. This action would signify a dramatic shift in the regulatory climate for DeFi platforms, potentially as a model for future crypto-based legislation.