Senate Revokes Crypto Tax Reporting Rule Passed Under Biden

The Senate has overturned a rule requiring cryptocurrency platforms to report customer transactions to the IRS.

The rule, adopted under the Biden administration, would have tasked crypto firms with providing the IRS with detailed customer information beginning with the 2027 tax year, the Wall Street Journal (WSJ) reported Tuesday (March 4).

The vote marks the latest in a series of victories for the crypto sector since President Donald Trump — who had been backed by the industry — took office.

“It’s a powerful statement of the importance of crypto. I think crypto was one of the major issues in the last election,” said Sen. Ted Cruz (R., Texas). “We just saw a really strong bipartisan repudiation of that regulation.”

The measure passed with a vote of 70-27, with 17 Democrats and one independent (Maine Sen. Angus King) joining the Republican majority.

As the WSJ notes, the rule was aimed at bolstering tax compliance, and creating parity with crypto exchanges and stock brokerages. But the crypto sector had argued that its platforms that allowed peer-to-peer exchanges weren’t really brokers.

The report also points out that repealing the rule would lead to $3.9 billion in lost government revenue over a decade, according to the nonpartisan Joint Committee on Taxation.

“It would encourage more of the digital asset industry to move into the shadows, making it more difficult to counter crimes ranging from tax evasion to fentanyl trafficking to terrorist financing,” Mike Kaercher, deputy director of the Tax Law Center at New York University, told the WSJ.

The vote came days before the White House’s planned crypto summit, where policymakers, industry leaders, and regulators will explore the changing landscape for digital assets.

Speaking with PYMNTS CEO Karen Webster earlier this week, QED Investors partner Amias Gerety pointed to the importance of this gathering in light of the rapid expansion of the crypto market and its implications for investors and the wider financial system.

“There’s an ongoing struggle to balance innovation with financial stability,” said Gerety, a former Treasury official under the Obama White House.

He acknowledged that while crypto offers new opportunities, it also carries significant risks, especially in areas of fraud, security and systemic vulnerabilities. Regulatory clarity, Gerety contended, will be critical in promoting a healthy digital asset ecosystem.

“The industry is at a crossroads,” Webster added. “Without clear guidelines, we risk either overregulating and stifling innovation or underregulating and exposing consumers to significant risks. The key will be striking a balance that encourages responsible growth.”