U.S. Senate Approves Cancellation Of IRS Crypto Tax Regulation

On March 27, 2025, the U.S. Senate officially passed a resolution to repeal a controversial tax regulation imposed by the Internal Revenue Service (IRS) concerning decentralized finance (DeFi) platforms. With an overwhelming vote of 70-28, the resolution has now been forwarded to President Donald Trump for final approval and enactment into law. This development is widely regarded as a symbolic victory for the Web3 and cryptocurrency (crypto) communities in the United States.

Repeal of IRS tax regulation: Key details

The IRS regulation, introduced in late December 2024 under the Biden administration, mandated that DeFi protocols—particularly those acting as “front-end service providers” (offering user access interfaces), comply with obligations similar to traditional financial brokers. Specifically, these platforms were required to:

• Collect and store users’ personal information.
• Report crypto transaction revenues to the IRS.
• Issue Form 1099 tax documents for non-wage income, including profits from crypto trading, rental income, royalties, and even gambling winnings.

However, this regulation faced fierce opposition from industry experts and Web3 leaders. Decentralized platforms like Uniswap and Aave, which do not retain user data or operate solely as open-source code, argued that the IRS requirements were “practically unenforceable.” Critics also slammed the rule as a “midnight regulation,” hastily enacted at the end of the Biden administration’s term.

Legislative journey: From house to senate

The resolution to repeal the IRS rule was spearheaded by Senator Ted Cruz (Republican, Texas) and Representative Mike Carey (Republican, Ohio). Earlier, on March 11, 2025, the U.S. House of Representatives passed a similar version of the resolution. Due to a budget-related provision, the legislation returned to the Senate for a final vote on March 27 before being sent to President Trump’s desk.

Notably, while the resolution garnered strong support from Republicans, it also received backing from several Democrats, including Senate Minority Leader Chuck Schumer. This bipartisan support underscores the widespread interest in refining crypto-related regulations in the U.S.

Reactions from the white house and crypto industry

On March 27, 2025, the U.S. Senate officially passed a resolution to repeal a controversial tax regulation imposed by the Internal Revenue Service (IRS) concerning decentralized finance (DeFi) platforms. With an overwhelming vote of 70-28, the resolution has now been forwarded to President Donald Trump for final approval and enactment into law. This development is widely regarded as a symbolic victory for the Web3 and cryptocurrency (crypto) communities in the United States. The repeal reflects growing recognition of the need for balanced regulations that foster innovation in the rapidly evolving crypto space. It also highlights a shift in legislative priorities under the current administration.

Meanwhile, Representative Richard Neal (Democrat) voiced concerns that Republican efforts to cut IRS funding and dismantle oversight rules are increasingly hampering the agency’s ability to regulate emerging financial activities like crypto. Nevertheless, with approval from both chambers of Congress, the resolution now awaits only President Trump’s signature to become law.

Implications for Web3 and the future of DeFi regulation

If signed into law, this would mark the first crypto-related legislation approved by President Trump since his return to the White House in 2025. The move would not only affirm a more crypto-friendly stance under his administration but also send a positive signal to Web3 projects in the U.S. Previously, several DeFi initiatives had threatened to exit the American market if the IRS regulation took effect.

However, experts caution that this is just the beginning. Significant legal gaps surrounding DeFi remain, and stricter replacement regulations could emerge in the future. Still, the repeal of the IRS tax rule is seen as a pivotal milestone, paving the way for new growth opportunities within the U.S. crypto community.

With the U.S. Senate’s decision to repeal the IRS crypto regulation on March 27, 2025, the Web3 industry is at a critical juncture. If signed into law by President Trump, this move would demonstrate the administration’s support for a more open approach to cryptocurrency. This decision could strengthen the confidence of developers, investors, and crypto users. However, as the industry celebrates this victory, all eyes will be on how future regulatory changes unfold. Stay updated with Sol Trade Bot for the latest crypto news and insights.