A law aimed at preventing the Internal Revenue Service (IRS) from collecting reporting information from decentralized finance (DeFi) entities may soon be signed into law by President Trump.
According to sources familiar with the situation, the Senate is poised to vote for the second time on the Congressional Review Act (CRA) resolution designed to repeal the IRS’s controversial ‘DeFi broker rule,’ which was enacted during the final days of the Biden administration.
Possible First Crypto Bill
The existing rule mandates that decentralized crypto entities adhere to standard IRS reporting requirements, a move critics argue could stifle innovation and place unnecessary burdens on the DeFi sector.
The Senate’s initial passage of the CRA on March 4 received broad bipartisan support, with a vote of 70-27, followed by the House’s approval on March 11 with a 292-132 vote.
However, due to constitutional requirements stipulating that federal budget-related bills must originate in the House, a second Senate vote is necessary.
Texas Republican Senator Ted Cruz, who introduced the CRA, hailed the Senate’s earlier vote as “a victory for American innovation.”
If the Senate successfully passes the CRA again, it will be sent to President Trump’s desk for signature, potentially marking the first crypto-related bill to become law.
Crypto Coalition Urges Congress To Address DOJ’s DeFi Overreach
In a parallel development, a coalition of over 30 crypto companies has expressed concerns regarding the Department of Justice’s (DOJ) interpretation of laws related to ‘unlicensed money transmitting businesses.’
This coalition, led by the DeFi Education Fund, sent a letter to key Senate and House committees urging action against what they perceive as “an overreach by the DOJ.”
The letter was co-signed by major industry players, including exchanges Coinbase and Kraken, venture capital firms A16z, Multicoin Capital, and Paradigm, as well as self-custody companies Exodus and Ledger.
The letter criticizes the DOJ’s classification of DeFi platforms as money transmitting businesses, which could expose software developers to criminal liability for facilitating illicit financial activities.
The signatories argue that the DOJ’s interpretation of Section 1960 of the US criminal code is overly broad and threatens developers who do not directly handle customer funds.
They also highlight contradictions with previous guidance from the Financial Crimes Enforcement Network (FinCEN), which excluded developers from being classified as money transmitters.
The issue gained urgency following the DOJ’s criminal charges against Roman Storm, a co-creator of the crypto mixer Tornado Cash, for allegedly operating an unlicensed money transmitting business.
This case marked the first time the DOJ applied criminal charges to DeFi developers, raising alarms in the industry about the potential for “regulation by criminal indictment.”
Amanda Tuminelli, Executive Director and Chief Legal Officer of the DeFi Education Fund, emphasized the coalition’s commitment to seeking clarity from Congress regarding Section 1960, thanking the diverse group of crypto participants who united to defend software developers’ rights against the DOJ’s aggressive stance.
Featured image from DALL-E, chart from TradingView.com
