US Senate passes resolution to repeal IRS DeFi broker rule

The US Senate has passed a resolution to repeal a controversial rule that would have required decentralised finance (DeFi) protocols to report to the Internal Revenue Service (IRS).

The Senate voted 70 to 27 on March 4 to approve the motion, which aimed to undo the Biden-era rule expanding IRS reporting requirements.

This rule would have mandated decentralised exchanges to report gross proceeds from crypto sales and disclose taxpayer details involved in the transactions.

The resolution now heads to the House, where it will need approval before being sent to President Donald Trump.

Trump has indicated that he supports repealing the rule.

This Senate action follows a similar move in the House, where a resolution to repeal the rule was advanced on February 26, but has yet to be voted on.

Eli Cohen, general counsel for the tokenising platform Centrifuge, expressed his disapproval of the rule, calling it “unworkable in practice.”

Cohen pointed out that, since the rule has not yet been enforced, the main change would be that taxpayers would report directly to the IRS without the involvement of intermediaries.

Kristin Smith, CEO of the Blockchain Association, emphasised the significance of the Senate’s decision, describing it as a positive moment for both DeFi and the broader US crypto industry.

She noted that this action represents a broader effort to keep crypto innovation in the US.

“DeFi is an American strategic strength,” Smith stated, adding that this move helps ensure the continued development of the sector within the country.

Smith further highlighted the growing pro-crypto sentiment in Congress and suggested that the passing of the resolution could help shape future efforts in stablecoin and market structure legislation.