Key Takeaways
- The U.S. Senate voted 70–28 to pass the repeal a second time,
- With strong bipartisan support, the House approved the resolution 292-132.
- The IRS rules, finalized in December 2024, were slated to take effect in 2027 but have now been overturned.
President Donald Trump has axed a sweeping IRS rule that threatened to tie decentralized exchanges into “unfair” tax reporting, a blow to federal tax regulators and a win for the crypto industry.
The now-defunct mandate, inherited from the Joe Biden era, cast a wide net over crypto markets—too wide, critics argued.
Trump Blocks IRS Crypto Reporting Rule
President Trump has signed legislation overturning an IRS rule that would have required cryptocurrency brokers, including decentralized platforms, to report user transactions to the federal government.
Originally finalized under President Biden, the rule aimed to close the tax gap in crypto markets. Treasury officials estimate it could recover nearly $4 billion in unpaid taxes over the next decade.
However, it drew sharp criticism from the crypto industry, which argued that decentralized exchanges—automated platforms that operate without human oversight—cannot comply with such requirements.
Industry advocates contended that the rule mischaracterized decentralized protocols and would have imposed impossible obligations on noncustodial platforms.
This repeal marks the first time a tax-related regulation has been struck down using the Congressional Review Act (CRA), a rarely used legislative tool that allows Congress to block some federal rules.
Bipartisan support in the now Republican-led legislature advanced the repeal, aligning with the Trump administration’s broader deregulatory agenda.
Congress Votes To Overturn IRS DeFi Tax Rule
Congress successfully voted to repeal the IRS broker rule.
The Senate voted 70-28 on March 26, clearing the resolution after a second vote was required under budget rules. The measure had passed the House with bipartisan support, 292-132.
By using the CRA, lawmakers bypassed the 60-vote filibuster and blocked regulators from reviving similar tax mandates in the future.
Crypto czar David Sacks said the repeal bill had been sent to the White House, where senior officials were expected to formally request President Trump’s signature—which he has since provided.
House Committee Moves To Block IRS DeFi Tax Rules
The U.S. House of Representatives had first challenged the IRS’ proposed tax policy on DeFi transactions.
The House Ways and Means Committee oversees the Treasury Department and voted 26-16 to advance the resolution under the CRA.
It later passed both chambers of Congress and was signed into law by the president, officially blocking the IRS rule from taking effect.
Rep. Mike Carey (R-Ohio) had warned that the IRS policy would overburden tax authorities and create unnecessary complications for American taxpayers.
However, Rep. Richard Neal (D-Mass.) defended the measure then, arguing that repealing the rule would weaken tax enforcement and allow crypto investors to evade reporting their earnings.
IRS DeFi Rules Spark Industry Backlash
The IRS regulation had sought to extend traditional broker reporting requirements to DeFi platforms, requiring them to track and report user transactions to tax authorities.
The Blockchain Association (TBA) quickly challenged the rules in court, arguing that they placed undue compliance burdens on software developers creating decentralized trading services.
TBA contended that enforcing such rules would stifle innovation and hinder entrepreneurs from building in the crypto space, a concern now realized.
Many in the crypto industry predicted the IRS rule would be overturned, especially under the Trump administration.
Critics argued the strict transaction monitoring requirements clashed with DeFi’s core principles and could have forced many protocols to either alter their operations or relocate outside the U.S.
Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
Beyond his professional pursuits, Prashant is an avid music enthusiast, often exploring diverse genres to unwind. A sports lover, he has a particular passion for cricket and frequently engages in discussions about the game. His multifaceted interests and sharp journalistic instincts make him a valuable contributor to CCN, where he continues shaping the crypto landscape's narrative.
Giuseppe Ciccomascolo began his career as an investigative journalist in Italy, where he contributed to both local and national newspapers, focusing on various financial sectors.
Upon relocating to London, he worked as an analyst for Fitch's CapitalStructure and later as a Senior Reporter for Alliance News. In 2017, Giuseppe transitioned to covering cryptocurrency-related news, producing documentaries and articles on Bitcoin and other emerging digital currencies. He also played a pivotal role in establishing the academy for a cryptocurrency exchange website. Crypto remained his primary area of interest throughout his tenure as a writer for ThirdFloor.
