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In a move that could be straight out of a Hollywood thriller (but with fewer explosions), the US Senate voted on March 4 to overturn a controversial IRS rule that would have forced DeFi protocols to report transactions to the tax authorities. This marks a huge victory for the crypto industry in the US, where regulation and innovation often clash like two stubborn bulls in a china shop.
US Senate Stands with DeFi
The vote ended with a landslide 70-27 in favor of repealing the rule, showing that there’s widespread support for keeping DeFi decentralized and free from unnecessary red tape. The rule, proposed under the Biden administration, would have forced decentralized exchanges (DEXs) and brokers to report detailed transaction data to the IRS. Critics, however, pointed out that this was as impractical as using a floppy disk in 2024 and threatened the very core principles of DeFi.
Next Stop: House of Representatives and Trump’s Desk
Before the champagne bottles pop, the resolution still needs approval from the House of Representatives before landing on President Donald Trump’s desk. But no need to panic – David Sacks, crypto and AI advisor at the White House, has already confirmed that Trump supports killing the rule. Looks like DeFi just gained a powerful ally in Washington.
Experts Weigh In
According to Eli Cohen, legal director at Centrifuge, a platform focused on RWA tokenization, the IRS rule was nothing short of “illogical and impractical”. He emphasized that even if the rule is scrapped, it doesn’t mean DeFi users can skip reporting their taxes—they still have to play nice with the IRS.
Meanwhile, Kristin Smith, CEO of the Blockchain Association, called it a “huge day for DeFi and the US crypto industry”. She believes the Senate’s decision sends a strong signal that the US sees DeFi as a strategic advantage, rather than something to be regulated out of existence and pushed overseas.
1/ It’s a big day for DeFi – and the US crypto industry. A bipartisan group of senators (including 18 Democrats) just voted to repeal the DeFi broker rule which would have crippled DeFi in the US.
Thank you @SenTedCruz for your leadership to help kill this rule for good.
— Kristin Smith (@KMSmithDC) March 4, 2025
A Bigger Trend Toward Pro-Crypto Policies?
This Senate victory isn’t an isolated incident—it’s part of a bigger shift towards pro-crypto policies in Washington. For the first time, we’re seeing concrete actions instead of just politicians nodding and smiling at blockchain conferences.
This could have a ripple effect on other key crypto regulations, including rules on stablecoins and the market structure of digital assets. If lawmakers continue this trend, we might finally get some clearer guidelines instead of vague, outdated policies that sound like they were written by someone who still uses AOL.
What’s Next?
For many crypto entrepreneurs and investors, this is a step in the right direction. Excessive and impractical regulations don’t just slow down innovation—they could push the US out of the global crypto race. By taking a more pragmatic approach, the US can maintain its leadership in the blockchain revolution.
Now, all eyes are on the House of Representatives and President Trump. Given the White House’s support, the chances of the resolution passing look pretty solid. If it does, it’ll be a major win for DeFi and a clear message that Washington isn’t looking to cripple the crypto industry—at least, not today.
🚀 DeFi just dodged a bullet. What’s next? Stay tuned!
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