Senate overturns Biden's crypto tax rule in landmark 70-27 vote

In a major victory for the cryptocurrency industry, the U.S. Senate on Tuesday overwhelmingly approved a resolution to overturn a Biden administration crypto tax rule.

The resolution, passed with a decisive 70-27 vote under the Congressional Review Act, seeks to eliminate the Internal Revenue Service's (IRS) new broker rule, which aimed to include decentralized finance (DeFi) platforms within its tax reporting framework.

The move represents a significant step toward nullifying the controversial rule, but the resolution must still pass in the House of Representatives before it can be signed into law by President Donald Trump.

If enacted, the resolution would not only revoke the current rule but also prevent the IRS from implementing similar regulations in the future.

Bipartisan Support Signals a Shift in Crypto Policy

Senator Ted Cruz, the chief sponsor of the resolution, lambasted the IRS rule as an "incoherent" federal overreach, arguing that software developers should not be classified as brokers and required to disclose user data. Cruz highlighted that such a requirement is impractical, as DeFi developers do not control users' funds or transactions.

The strong support from both Republicans and Democrats echoes previous bipartisan efforts to push back against regulatory measures on digital assets. This growing consensus could pave the way for future legislative efforts focused on crypto market structure and stablecoin regulations, aiming to provide a clearer federal oversight framework for the industry.

Cruz noted that the bipartisan backing underscores a generational divide in Congress, with younger lawmakers more inclined to support pro-crypto policies. He urged lawmakers to rescind the IRS rule to "unleash the future" of digital finance.

House Vote and White House Approval Pending

The resolution now moves to the House of Representatives, where the Financial Services Committee has already cleared a matching resolution and recommended its approval in a full House vote. If the House follows the Senate's lead, the resolution will be sent to President Donald Trump for final approval.

The White House has signaled that Trump is likely to sign the measure promptly if it reaches his desk, dealing a blow to the Biden administration’s regulatory approach to the crypto industry.

With Tuesday’s vote, the Senate has taken a decisive stance against an IRS rule that the crypto industry has long argued would impose undue burdens on developers and stifle innovation in the DeFi space. The upcoming House vote will now determine whether this regulatory rollback is finalized, setting a precedent for the future of crypto taxation in the U.S.