The U.S. Senate has cast a decisive vote to abolish a contentious cryptocurrency tax regulation, which was implemented just weeks before President Trump’s term began. Late on Wednesday, the Senate voted 70-28 to nullify the Internal Revenue Service (IRS) rule, and the bill is now on its way to President Trump’s desk for signature. His senior advisors, including White House Crypto A.I. and Crypto Czar David Sacks, are expected to advise him to sign it.
The joint resolution to repeal this IRS rule was initiated by Sen. Ted Cruz, R-Texas, and Rep. Mike Carey, R-Ohio, during the final phase of the Biden administration in late December. This rule necessitated certain actors in the decentralized finance sector to function akin to traditional securities brokers, obligating them to accumulate and report user trading data. Moreover, it required them to provide customers with Form 1099 tax returns, disclosing non-employment income like gambling winnings, rents, and royalties.
According to the U.S. Treasury Department, the finalized rule targeted “front-end service providers” that interact directly with customers, suggesting that it aimed at entities operating the primary website for accessing a decentralized protocol rather than the protocol itself.
Earlier in March, the Trump White House expressed its concerns over the regulation, criticizing it as a last-minute legislation from the previous administration that could pose privacy issues. The Senate and the House had both voted to overturn the rule earlier this month. However, because of its association with a budget stipulation, a final Senate vote was required before it could be presented to President Trump.
There has been some support from Democrats, including Senate Minority Leader Chuck Schumer, although the majority of support has come from Republicans. “Upon the bill’s passage today, it will be delivered to President Trump’s desk to be the first crypto bill signed,” stated Ron Hammond, senior director of government relations at the Blockchain Association, before the vote.
When the rule was finalized, it faced significant resistance from crypto industry leaders. Organizations like the DeFi Education Fund initiated lawsuits against the IRS shortly after the rule’s finalization, warning that these obligations could drive the entire emerging technology offshore.
The Senate’s vote was welcomed by Amanda Tuminelli, the fund’s executive director, who described the repeal as an essential step towards safeguarding U.S. innovation and enabling developers to continue producing groundbreaking technologies without the constraints of ambiguous, overreaching regulations.
However, some Democrats have opposed the resolution, accusing Republicans of attempting to undermine the IRS. “They are the party that has consistently underfunded the IRS,” said Rep. Richard Neal, D-Mass., during a hearing in February.
