The U.S. Senate has repealed tax regulation threatening the crypto market through a decisive 70-28 vote.
Causes of Regulation Backlash
The tax regulation, introduced in December 2024, required certain DeFi platforms to collect and report transaction data, including issuing 'Form 1099' tax forms to their users. The Treasury Department stated that the rule specifically targeted entities interacting directly with decentralized protocols. The regulation faced swift backlash from the crypto sector, fearing it would stifle innovation and push firms to seek opportunities abroad. The DeFi Education Foundation, alongside several organizations, filed a lawsuit against the IRS, warning of severe market implications.
Political Figures' Response
Senator Ted Cruz and Representative Mike Carey were instrumental in advocating for the repeal. The vote saw Republicans and supportive Democrats, including Senate Minority Leader Chuck Schumer, unite for the cause. However, some Democrats expressed concerns that the Republicans aimed to weaken the IRS by curtailing its budget.
Significance of Senate Actions
The Senate’s repeal of the tax regulation reflects a significant bipartisan effort to protect the cryptocurrency sector. Support from both sides underscores recognition of the importance of maintaining a competitive digital currency market.
The Senate's actions emphasize the need for balancing regulation with innovation to sustain a competitive crypto market.
