Crypto Rule Override Hits Trump’s Desk — Major Regulation Nears Approval
The U.S. Senate just voted 70-28 to overturn a controversial Internal Revenue Service (IRS) rule targeting DeFi developers, delivering a major victory for the crypto community, which now awaits final approval from President Donald Trump.
U.S. Senate Overturns IRS Crypto Rule
On March 26, Sen. Ted Cruz (R-TX) announced that his resolution to overturn an IRS rule had received overwhelming bipartisan support in the Senate. The measure passed by a 70-28 vote, after previously passing the House and Senate. Now, the resolution heads to President Trump’s desk to be signed into law.
A major victory for the crypto community
The rule Cruz's resolution targets, which is set to be finalized by December 30, 2024, has been controversial because it defines DeFi software developers as "brokers" even though they are not directly involved in processing crypto transactions. Cruz hailed the victory as a major step forward in protecting technological innovation and economic freedom.
"Cryptocurrencies have been a critical force in creating new markets and diversifying our economy," Cruz said after the vote. "The American people understand and support crypto, and that support was demonstrated in tonight's overwhelming vote." He also emphasized his expectation that the president would soon sign the resolution into law, and said he was proud to have led the fight against the Biden administration's "regulatory assault" on crypto.
Controversial IRS Rule
The IRS rule, titled “Reporting Gross Proceeds by Brokers,” aims to expand the definition of “broker” to include DeFi software developers who facilitate digital asset transactions, even though they do not directly process cryptocurrency transactions. The rule has been met with opposition from technology developers and the crypto community.
Critics of the rule have noted that “the rule inappropriately defines software developers as ‘brokers,’ even though they are not directly involved in cryptocurrency transactions.” Cruz’s resolution has passed both houses of Congress, and now awaits the President’s signature to become law.
Crypto Community Support
Many organizations and individuals in the crypto space have supported the resolution. More than 75 members of the Blockchain Association, including companies like Uniswap, Paradigm, the DeFi Education Foundation, and blockchain advocacy groups from Texas, Pennsylvania, South Carolina, and Ohio, have signed a letter expressing their support. Other organizations like the Digital Chamber and Coin Center have also joined the call for the repeal.
The resolution’s passage is seen as a major milestone for the development of decentralized finance technology and affirms the important role of cryptocurrencies in the modern economy.