The U.S. Senate voted to repeal a controversial crypto tax rule finalized weeks before the Trump administration took office. The Senate voted 70-28 late Wednesday to repeal the Internal Revenue Service rule, sending the measure to President Donald Trump, who is expected to sign it into law. White House Crypto A.I. and Crypto Czar David Sacks said Trump’s senior advisors plan to recommend that he do so.
Sen. Ted Cruz, R-Texas, and Rep. Mike Carey, R-Ohio, introduced a joint resolution to repeal an IRS rule finalized in late December during the final days of the Biden administration. The rule required certain “decentralized finance industry participants” to operate like traditional securities brokers, mandating that they collect and report user trading data. It also would have obligated them to issue Form 1099 tax returns to customers, reporting non-employment income such as gambling winnings, rents and royalties.
According to the U.S. Treasury Department, the finalized rule applied to “front-end service providers” that interact “directly with customers,” indicating that it targeted entities running the primary website accessing a decentralized protocol rather than the protocol itself. In a March 4 statement, the Trump White House criticized the measure as a “midnight regulation in the final days of the previous Administration” and warned that it posed privacy concerns.
The Senate voted earlier this month to overturn the rule, followed by the House. Because the measure was tied to a budget provision, a final Senate vote was required before it could be sent to Trump’s desk. Votes on the bill have also previously garnered some Democratic support, including from Senate Minority Leader Chuck Schumer, though most support has come from Republicans.Â
“After this bill passes today, it will be sent to President Trump’s desk to be the first crypto bill signed,” Ron Hammond, senior director of government relations at the Blockchain Association, said in a post on X ahead of the vote. When it was finalized, the rule sparked strong opposition from crypto industry leaders. The DeFi Education Fund, along with other groups, sued the IRS shortly after its finalization, warning that the requirements would “push this entire, burgeoning technology offshore.”
Calling the repeal a “crucial step towards protecting U.S. innovation and ensuring that developers can continue to build cutting-edge technologies without the burden of unclear, overreaching regulations,” Amanda Tuminelli, the fund’s executive director, hailed the Senate’s vote in a statement on Wednesday. “The DeFi Education Fund commends the bipartisan supermajority of Congressional leaders who voted in favor of the ‘DeFi Broker’ CRA resolution, recognizing the severe and far-reaching consequences of the IRS’ misguided rulemaking.” Some Democrats have opposed passing the resolution and say Republicans are trying to weaken the IRS.”They are the party that has consistently underfunded the IRS,” said Rep. Richard Neal, D-Mass., in a hearing in February.Â
