The Senate dealt a devastating blow to the Biden administration‘s crypto regulations Monday, voting 70-27 to kill an IRS rule that would have classified decentralized finance platforms as brokers. The bipartisan rebuke saw 18 Democrats joining all 50 Republicans to overturn the controversial measure using Congressional Review Act authority. Senator Ted Cruz of Texas, the resolution’s architect, couldn’t have asked for a better outcome.
The now-endangered IRS rule, finalized last December, would have forced DeFi platforms to report user transactions for tax purposes starting in 2027. Critics called it “technologically unfeasible.” No kidding. How exactly does a smart contract file tax forms?
The IRS tried making code file taxes. Even bureaucrats should know algorithms don’t have mailing addresses.
Crypto industry players wasted no time celebrating. The Blockchain Association hailed it as a “victory for innovation,” while the DeFi Education Fund dubbed it a “historic milestone.” Coinbase’s Chief Legal Officer highlighted the bipartisan nature of the vote – something rarer than a functioning government website these days.
The political implications are huge. This vote aligns perfectly with Trump’s pro-crypto campaign promises and sets the stage for broader regulatory reforms. These platforms already offer yield farming opportunities with potentially higher returns than traditional banking systems. Crypto clearly mattered in the recent election, and politicians are finally getting the message.
Economically, killing the rule prevents an estimated $3.9 billion in government revenue over a decade. But it might keep DeFi platforms from fleeing overseas. America first, right?
The House of Representatives gets the baton next. Their Financial Services Committee has already approved a matching resolution, and Trump seems ready with his signing pen. If passed, the IRS won’t be able to try this particular trick again. Wednesday will see the Senate vote on a second crypto resolution targeting the CFPB’s digital-payments rule.
Markets reacted predictably. Bitcoin jumped 3.85% to $67,500 within minutes of the announcement. Ethereum climbed even more at 4.69%. DeFi tokens surged, and total value locked in protocols rose 5% to $100 billion.
The White House has scheduled a crypto summit for March 7. Maybe they’ll serve crow.
