In a stunning rebuke of regulatory overreach, Congress has voted overwhelmingly to repeal a controversial IRS rule targeting the cryptocurrency industry. The House voted 292-132 to kill the regulation, with 76 Democrats joining all 216 Republicans in telling the IRS to back off. Not exactly a close call.
The Senate followed suit with an even more decisive 70-27 vote on March 4, 2025. Bipartisan support in both chambers? In this political climate? Yeah, that actually happened. The resolution now heads to President Trump’s desk, where White House advisors are reportedly pushing him to sign it.
The doomed IRS rule would have classified decentralized finance (DeFi) platforms as brokers, requiring them to report user transactions and data. One tiny problem: DeFi platforms physically cannot collect this information. It’s like asking your toaster to file your taxes. Not happening.
DeFi platforms can’t collect user data any more than your toaster can file taxes. The IRS rule was doomed from the start.
Critics blasted the rule as unfair and impossible to implement. They warned it would drown the IRS in useless paperwork while driving innovation overseas. The rule, rammed through in the waning days of the Biden administration, threatened an industry that one in four Americans now participates in.
The crypto community is celebrating the vote as a major victory. Coinbase called it the most significant bipartisan crypto vote ever. Privacy advocates cheered too, seeing the rule as a dangerous precedent for financial surveillance. Traditional broker rules simply don’t work for platforms that never control user funds or data.
Economically, the stakes were high. Estimates suggested the U.S. could lose $3.9 billion in tax revenue over a decade if companies fled to more crypto-friendly jurisdictions. Nobody wants that.
DeFi’s fundamental design relies on smart contracts to automate financial transactions without intermediaries, making traditional regulatory approaches fundamentally incompatible.
Once Trump signs the resolution, the IRS will be prohibited from introducing similar rules in the future. The decisive congressional action opens the door for more sensible crypto regulations that don’t strangle innovation or invade privacy. For the crypto industry, this isn’t just a win—it’s a knockout.
