In a stunning rebuke to regulatory overreach, the Senate voted 70-27 to kill a controversial IRS rule targeting decentralized finance platforms. The resolution, introduced by Senator Ted Cruz, leveraged Congressional Review Act authority to dismantle regulations many viewed as a death sentence for American crypto innovation.
Let’s be real. The IRS rule was a mess. Finalized in the final days of 2024, it tried forcing DeFi platforms to collect user data and implement KYC requirements. Good luck with that. These platforms literally can’t comply – they’re code, not companies. The rule was set to kick in January 2027, but Senate lawmakers weren’t having it.
The IRS rule was doomed from the start—forcing code to act like companies is regulatory fantasy at its finest.
The vote wasn’t even close. A whopping 17 Democrats joined Republicans in the bipartisan smackdown on March 4, 2025. Crypto industry leaders practically threw a parade after the vote. The Blockchain Association, Coinbase, a16z, and others called it everything from “historic” to a “win for innovation.” No kidding.
Critics of the rule didn’t hold back. They slammed it as technologically impossible, unconstitutional, and a privacy nightmare. Respected crypto advocacy group Coin Center specifically criticized the rule as technologically unfeasible for many platforms. One senator called it “regulation by strangulation.” Harsh, but not wrong.
The White House is on board to kill the rule too. AI and crypto czar David Sacks labeled it an “11th hour attack” by the previous administration. President Trump has signaled he’ll sign the resolution if it reaches his desk, continuing his administration’s crypto-friendly approach.
Now the fight moves to the House. The Financial Services Committee has already approved a matching resolution, and a full floor vote is coming soon. It needs a simple majority to pass.
If successful, the DeFi sector could see major benefits. More users. More innovation. More certainty for developers who’ve been living under a regulatory cloud.
The message from Congress is clear: Heavy-handed regulation that ignores technological realities won’t fly. Not anymore. The crypto world is watching as the House prepares for its vote.
