Senate strips DeFi protocols of obligation to hand over customer data to the IRS

What’s new? The US Senate by a majority vote (70 to 28) supported the repeal of the rule that required DeFi protocols to turn over customer information to the Internal Revenue Service (IRS). Earlier, the repeal of the rule was also approved by the House of Representatives, and after the Senate vote, the corresponding resolution was sent to President Donald Trump for his signature.

Voting results

What else is known? As previously reported by Trump’s cryptocurrency and AI advisor David Sacks, the president supports the repeal of the rule and intends to sign the resolution.

This tax reporting rule was proposed by the Treasury Department in August 2023 during Joe Biden’s presidency. It expanded the definition of “broker” to include software vendors that facilitate access to DeFi protocols.

It required exchanges, including decentralized ones, to send annual reports starting in 2026 with gross transaction revenue and data on how much customers paid to buy assets.

It was supposed to exclude those involved only in verifying distributed ledgers, such as miners and stakers.

Critics emphasized that it would create inappropriate burdens or would not be enforceable at all, which would hinder innovation in the crypto sector.

For example, in October 2023, Coinbase, the leading US centralized crypto exchange, opposed the rule because it imposes impossible reporting requirements on a wide range of participants in the digital asset ecosystem.

And in February 2025, after Trump’s inauguration, the Blockchain Association, a lobbying group that includes 75 companies, sent a letter to Congress asking it to repeal the rule because it poses privacy risks.

Following the Senate vote, Blockchain Association CEO Christine Smith said her organization looked forward “to taking this harmful rule off the books for good.”

Source: X.com

Among those opposing the resolution was House member Lloyd Doggett, a Democrat, who said before the vote that repealing the rule “makes tax evasion and money laundering so much easier for wealthy Republican donors who have been using these decentralized exchanges.”

He argued that repealing the rule would create a “loophole that would be exploited by wealthy tax cheats, drug traffickers and terrorist financiers.”