On March 4, 2025, the U.S. Senate passed joint resolution S.J.Res.3, disapproving the DeFi broker reporting regulations Treasury finalized at the end of the Biden Administration. Senator Ted Cruz (R-TX) introduced the resolution earlier this year alongside several other senators.
The resolution passed the Senate pursuant to the Congressional Review Act (CRA) with significant bipartisan support, with 70 senators approving the challenge.
Before the Senate vote, Senate Majority Leader John Thune (R-SD) said in a statement that “The Biden administration did everything it could to stifle financial innovation in the United States, threatening to send digital asset companies overseas,” adding that the “Senate is working to undo these burdensome regulations one at a time to restore financial freedom for the American people.”
The U.S. House of Representatives will vote on the joint resolution shortly—the House Financial Services Committee moved on February 28, 2025, to introduce the identical House resolution to the House floor.
If approved by the House and signed by the president, the DeFi broker reporting regulations promulgated in T.D. 10021, which would have been effective for transactions beginning in 2026, will not take effect. The IRS would not be allowed to reissue or author new regulations that are substantially the same as the current regulations, unless specifically authorized to do so by a law enacted after the date of the joint resolution. The CRA also ostensibly blocks judicial review of a determination under the CRA, stating that “[n]o determination, finding, action, or omission under this chapter shall be subject to judicial review.” (5 U.S.C. § 805). Courts have interpreted this language broadly, with most courts of appeal holding that the CRA precludes judicial review of any issue arising under the CRA. See Montanans for Multiple Use v. Barbouletos, 568 F.3d 225, 229 (D.C. Cir. 2009).
If the joint resolution is passed, the IRS could go back to the drawing board and attempt to provide updated rules regarding broker reporting obligations for DeFi platforms, provided that any new regulations are not “substantially the same” as the current regulations.
The final regulations with respect to centralized digital asset exchanges which were finalized in T.D. 10000 are still slated to go into effect on schedule.
Learn more about Fenwick’s blockchain and cryptocurrency practice. For the latest cryptocurrency news and regulatory developments, visit our Fenwick Crypto Review.