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Senate to vote on repealing IRS rule targeting DeFi brokers

Senate to vote on repealing IRS rule targeting DeFi brokers

CryptopolitanCryptopolitan2025/03/04 17:00
By:By Cryptopolitan News

Share link:In this post: Republican Senators are pushing to repeal the IRS rule on DeFi brokers reporting. Once the Senate approves the resolution, the House of Representatives will also get to vote on the decision. The IRS rule for brokers requires decentralized exchanges to report their users’ information, but stakeholders say it is an impossible-to-obey rule.

Republican Senator Ted Cruz is pushing for the controversial Internal Revenue Service (IRS) rule requiring DeFi brokers to report user data to the agency to be overturned. In a post on X, Digital Chambers executive Taylor Barr said the resolution will come up for a vote tomorrow.

According to Barr , Cruz wants to use the Congressional Review Act (CRA) to repeal the controversial rule after it was read twice in the Senate and referred to a committee. He added that it would most likely pass because the CRA only requires a simple majority vote instead of a two-thirds majority.

Barr said:

“A reminder, only a simply majority is needed to pass CRAs (meaning it is likely to pass).”

Republican Senators are on board

Aside from Cruz, several other Republican Senators also support the resolution. These include Senators Cynthia Lummis, Bill Hagerty, Thom Tillis, Tim Sheehy, and Ted Budd.

Senate to vote on repealing IRS rule targeting DeFi brokers image 0 Joint Resolution for Repeal of IRS Rule led by Senator Ted Cruz. Source: Taylor Barr

Meanwhile, Fox Business journalist Eleanor Terret added that Cruz’s plans to get the final vote by tomorrow may face delays due to the scheduled Presidential Address of Congress, which is also set for tomorrow. However, she noted that a final decision will likely happen this week.

If the resolution gets a majority vote in the Senate, it will head to the House of Representatives. The House Ways and Means Committee has already voted to overturn the rule on February 26, with 26 people supporting a resolution from Rep Mike Carey while 16 voted against it.

See also Upbit operator sues South Korea’s Financial Intelligence Unit over sanctions

Once the Senate approval is finalized, the whole House will get to vote on the resolution, and a simple majority will effect the repeal.

What is the IRS rule for DeFi brokers?

The IRS approved the rule, officially known as the rule relating to “Gross Proceeds  Reporting by Broker That Regularly Provide Services Effectuating Digital Assets Sales,” in December 2024 and is scheduled to become effective by 2027.

The rule expands tax reporting requirements to include decentralized exchanges and requires these DeFi brokers to record and report information on crypto trading, including user data.

However, many in the crypto community criticized the rule, noting that it imposed an impossible-to-fulfill burden on DeFi brokers because decentralized exchanges do not collect the user data needed to meet these requirements.

Legislators pushing to repeal the rule also note that this is why the repeal is important. Carey said:

“We must pass this resolution to avoid this nightmare for American taxpayers and for the IRS, while ensuring that the United States is in fact in a position to lead the world in innovation with digital assets and in the crypto sector.”

There is a pending lawsuit filed by blockchain advocacy groups – Defi Education Fund, Texas Blockchain Council, and the Blockchain Association against the Department of Treasury and IRS  over the bill. They claimed that the IRS ignored the concerns of how the rule could cripple the crypto industry.

See also Colombia moves toward crypto regulation as adoption rates continue to climb

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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