Senate Votes 70-28 to Crush IRS Rule Targeting DeFi Developers, Delivering Sweeping Crypto Victory

The Senate voted 70-28 to crush an IRS rule targeting DeFi developers, delivering a sweeping crypto victory now heading to Trump's desk for final approval.

The U.S. Senate has voted 70-28 in favor of a resolution to overturn a rule by the Internal Revenue Service (IRS) that would have targeted decentralized finance (DeFi) developers. The measure, which was introduced by Senator Ted Cruz (R-TX) and supported by a bipartisan majority, now heads to President Donald Trump’s desk for final approval.

The IRS regulation, titled Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuvating Digital Asset Sales, was finalized on Dec. 30 and drew criticism for classifying developers of DeFi software as brokers despite their lack of involvement in handling cryptocurrency transactions.

“This administration’s attempt to impose a new reporting requirement on cryptocurrency developers was a prime example of how a small technical change in legislation can have enormous and unanticipated consequences,” said Cruz, a vocal opponent of the Biden administration’s crypto policies.

During a March 26 vote, the Senate approved the resolution to nullify the rule with a vote count of 70-28, following prior approval by the Senate and the U.S. House of Representatives.

“Cryptocurrency has become a leading driver in creating new markets and diversifying our economy. The American people know it and support crypto, and that support was reflected this evening in the overwhelming bipartisan majority that voted for my resolution,” Cruz said. “I look forward to the President signing it into law and I am proud to be leading the fight to defend cryptocurrency from Biden’s abusive regulatory assault.”

The regulation in question, which was finalized by the Treasury Department’s Bureau of Consumer Financial Protection (BCFP) and assigned to Article III of Title 26 of the U.S. Code of Federal Regulations, aimed to extend the classification of brokers to include those who provide services effectuating digital asset sales.

However, critics argued that the rule would have had a devastating impact on the crypto industry, ultimately forcing developers to shut down their operations to avoid compliance.

“This new reporting requirement would apply to any developer who incorporates open-source code on a chain, requiring them to collect and report the gross sales of every user of their software—no matter where in the world they are located—or face criminal penalties,” said a March 20 statement by the DeFi Education Fund.

Moreover, the measure faced opposition from a bipartisan majority of lawmakers in both the House and Senate, who ultimately moved to intervene and overturn the rule.

The resolution to invalidate the IRS regulation was also supported by a vast coalition of crypto policy organizations, including over 75 members of the Blockchain Association, which penned a letter to Congress in support of the measure. Other backers included the Digital Chamber, Uniswap, Paradigm, Coin Center, and regional blockchain advocacy groups from Texas, Pennsylvania, South Carolina, Ohio, and more.