IRS Rule on Crypto Brokers Has Just Been Repealed

There are moments when politics and tech clash head-on. And this time, it's crypto that has won a decisive round in Washington.

The U.S. Senate has voted to repeal a broadly disliked IRS rule on reporting "gross proceeds" of digital assets, a move that could have far-reaching implications for the crypto industry.

The rule, part of the 2024 tax law, was set to come into effect in 2025. It required "brokers" of digital assets to report the "gross proceeds" of any digital asset to the IRS, and penalties for noncompliance were to be levied on taxpayers.

The Senate vote on Tuesday to overturn the rule, using the Congressional Review Act, was largely bipartisan, with 10 Democrats joining all 53 Republicans in voting to strike down the IRS regulation. The House of Representatives is also expected to approve the measure.

President Donald Trump is expected to sign the bill, effectively canceling the rule.

The Biden administration’s rule, which was supposed to apply to brokers such as exchanges and platforms, was seen as too broad by many, as it would also have included DeFi protocols, crypto developers, and even non-custodial apps.

The crypto industry had argued that the rule was technically unenforceable, legally vague, and frankly counterproductive.

"This administration has set out to fundamentally reshape America’s economic landscape, and in doing so, it has created a perfect storm of overreach and incompetence," said Senate Majority Leader Mitch McConnell (R-KY). "The administration’s attempt to impose a new reporting regime on digital assets is a case in point."

"This rule would have had a devastating impact on the emerging crypto industry and the millions of Americans who use these technologies," said Sen. Tom Carper (D-DE), the ranking Democrat on the Senate Small Business and Entrepreneurship Committee. "I'm glad the Senate was able to act quickly to prevent this rule from taking effect."

The move comes as Congress is increasingly focused on cryptocurrency regulation. The Senate Banking Committee is set to hold a hearing on Wednesday on the topic of stablecoins.

"This administration’s overreach in its attempt to expand the definition of ‘broker’ to include almost any entity that comes into contact with digital assets is a perfect example of the Biden administration’s radical agenda to fundamentally alter America’s economic landscape," said Rep. Steve Scalise (R-LA), the majority whip.

"The administration’s rule would have created an administrative nightmare for both taxpayers and the IRS, and it’s clear that a bipartisan majority of lawmakers in both chambers saw the wisdom in working together to prevent this overreach from taking effect."

Scalise added that the House would move quickly to pass the resolution and send it to the president’s desk.

The IRS did not immediately respond to a request for comment.