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Bipartisan Supermajority in the Senate Passes “Broker” CRA
What happened?
On March 4, 2025, the Senate voted on S.J. Res. 3, a joint resolution of disapproval of the DeFi portion of the Internal Revenue Service’s (IRS) “Broker Rule.” The resolution leverages the Congressional Review Act, which allows Congress to disapprove of recently finalized regulations. In a heavily bipartisan 70-27 vote, the resolution passed.
As a refresher, on December 27, 2024, the Treasury Department & IRS finalized the second portion of their “broker” rulemaking focusing on DeFi. The rule requires DeFi industry participants that are not brokers to act as brokers; Treasury purported to redefine the statutory term “broker”—which Congress defined to reach only those who, “for consideration,” “effectuat[e] transfers of digital assets on behalf of another person,” 26 U.S.C. § 6045(c)(1)(D)—to reach anyone who provides a “trading front-end service” or “other effectuating services,” even if they do so for free and even if the service does not itself effectuate transfers. The rule also purports to require DeFi industry participants to follow onerous reporting requirements, which Congress designed for actual brokers, for every transaction. Accordingly, DEF, Texas Blockchain Council (TBC), and Blockchain Association (BA) filed suit the same day the rule was finalized.
Ahead of the Senate floor vote, the White House’s Crypto and AI Czar, David Sacks, released a Statement of Administration Policy (SAP) on the proposed legislation. The Administration announced strong support for the disapproval resolution, noting that the broker rule inappropriately requires certain DeFi participants to report sensitive taxpayer data in relation to gross proceeds from crypto transactions. The SAP also noted that if S.J. Res. 3 were presented to the President, “his senior advisors would recommend that he sign into law.”
Senator Ted Cruz (R-TX), who introduced the Senate resolution, noted in his floor speech that DeFi "technology holds potential for technological and financial innovation that we are just beginning to explore.” And that “at its core DeFi was designed to allow individuals to freely buy, sell, and exchange digital assets without reliance on third party intermediaries.” Senator Cruz stated that the Broker Rule is “untenable on its face” and that “DeFi interfaces are neutral technological tools, not financial intermediaries.”
What does this mean?
The Senate vote is a major win for the DeFi community. DeFi Education Fund applauds the bipartisan supermajority of 70 Senators who recognized the need to push back against regulatory overreach to protect Americans' freedom to choose how they transact and American innovation. The Senate’s supermajority vote not only underscores the rapidly growing pro-crypto bipartisan consensus in Congress, but the need for clear regulation that respects disintermediation.
Crypto Caucus Announced in Congress
What happened?
On March 3, Representatives Ritchie Torres (D-NY) and Tom Emmer (R-MN) formally announced the Congressional Crypto Caucus. This bipartisan group was created to function as a unified voting bloc focused on advancing pro-crypto legislation in Congress. The new caucus is designed to take direct legislative action, ensuring that the United States remains a global leader in digital assets and blockchain innovation.
Representative Tom Emmer (R-MN), the Majority Whip, stated “This Caucus serves as an ideologically unified, nonpartisan group of members that can quickly mobilize to support key digital asset initiatives in Congress.”
What does this mean?
The formation of the Crypto Caucus represents a continuation of the growing bipartisan support for crypto in Congress. By acting as a voting bloc, this caucus has the potential to influence the passage of key legislation that will define how crypto and blockchain technology are regulated in the United States. DEF applauds the bipartisanship in the creation of this caucus and recognizes it as a crucial step toward establishing clear and fair regulations for digital assets.
SEC Continues to Drop Crypto Investigations and Enforcement Actions
What happened?
On March 3rd, Yuga Labs, the company behind prominent NFT collections like Bored Ape Yacht Club (BAYC) and CryptoPunks, announced that the U.S. Securities and Exchange Commission (SEC) has officially closed its investigation into the company. The probe, initiated in October 2022, purported to determine if certain NFTs and the distribution of ApeCoin (APE) by Yuga Labs qualified as securities under U.S. law.
Also on March 3rd, Kraken announced that the SEC agreed in principle to dismiss its lawsuit against the company with prejudice. The SEC filed the lawsuit in November 2023, alleging that Kraken operated as an unregistered securities exchange, broker, dealer, and clearing agency.
On March 4th, Cumberland DRW, a prominent crypto trading firm, announced that it reached an agreement with the SEC to dismiss the regulator's lawsuit against the company. This joint filing, agreed upon in principle on February 20, is currently pending the SEC's formal approval. The SEC filed the lawsuit in October 2024, alleging that Cumberland operated as an unregistered securities dealer by trading over $2 billion in crypto assets deemed securities since 2018.
What does this mean?
The SEC’s recent decisions to dismiss cases against major crypto entities like Kraken, Yuga Labs, and Cumberland DRW marks a significant shift in the regulatory landscape away from regulation by enforcement. This development is part of a broader trend of the SEC recently ending investigations and dropping enforcement cases against other major crypto entities, including Coinbase, ConsenSys, OpenSea, Gemini, and Uniswap Labs.
Nominations Proceed for Key Financial Regulators
What happened?
Last week, the Senate confirmed several Trump Administration nominees to key financial regulatory positions.
On March 6, the Senate Banking Committee (SBC) advanced four nominees for confirmation on the Senate floor. Dr. Stephen Miran was advanced to be confirmed as Chairman of the Council of Economic Advisors in the Executive Office of the President. Jeffrey Kessler was advanced to be Under Secretary of Commerce for Industry and Security at the Department of Commerce. William Pulte was advanced to be Director of the Federal Housing Finance Agency. And finally, SBC advanced the nomination of Jonathan McKernan to be Director of the Bureau of Consumer Financial Protection (CFPB).
Separately, the Senate Finance Committee held a hearing to consider the nomination of Michael Faulkender to be Deputy Secretary of the Treasury, replacing Adewale Adeyemo, a prominent critic of crypto.
What does this mean?
The advancement of these nominations represent a changing of the guard away from tough opponents of the crypto industry. Notably, in 2023, former Deputy Treasury Secretary Adeyemo sent a letter to Congress seeking to “define a new cryptocurrency-related category of ‘financial institution’ under the [Bank Secrecy Act]” (BSA), which would include exchanges, wallet providers, validator nodes, and other DeFi participants. But, as DEF has explained, those who do not exercise “total independent control” over user assets cannot be classified as financial institutions under the BSA, nor should they be. While the new administration’s approach to national security in the crypto space remains to be seen, DEF looks forward to working with the new nominees in their new posts.
President Trump Issues Executive Order to Establish a Bitcoin Strategic Reserve
What happened?
On March 6th, President Trump signed an Executive Order entitled “Establishment of the Strategic Bitcoin Reserve and the United States Digital Asset Stockpile.” The Order declares that it is the policy of the United States to establish a Strategic Bitcoin Reserve and a Digital Asset Stockpile which can serve as a “secure account for orderly and strategic management of the United States’ other digital asset holdings.”
The order instructs the Secretary of the Treasury to establish an office to administer and maintain control of custodial accounts collectively known as the “Strategic Bitcoin Reserve,” capitalized with Bitcoin held by the Department of the Treasury forfeited as part of criminal or civil asset forfeiture proceedings or in satisfaction of a judgment imposed by any executive agency or court. The Order also creates a Digital Asset Stockpile, consisting of additional digital assets forfeited to the Department of Treasury. The fact sheet released on the Order states that the government “will not acquire additional assets for the U.S. Digital Asset Stockpile beyond those obtained through forfeiture proceedings.”
The Order notably does not provide any requirement for the federal government to use taxpayer dollars to purchase bitcoin, or any precise requirement to purchase Bitcoin at all. Overall, the Order represents a continuation of the Trump Administration’s efforts to make the United States the “crypto capital of the world” and their continuing efforts to bolster the American digital asset industry.
DEF’s Laz Pieper Speaks on Panel at ETH Denver
Last week, DEF’s Laz Pieper spoke on a panel entitled “What To Expect in the New Era of Crypto Regulations” at ETH Denver mainstage. The Panel explored the evolving regulatory landscape for DeFi, primarily in the United States under the new administration, but also touched on regulation under the Biden administration and in the European Union. The general mood of the panel was one of optimism and appreciation for the current administration’s efforts to provide regulatory clarity.
However, while most panelists agreed that advancements are being made in terms of the securities statutes and stablecoin legislation, there was common concern among the panelists about the Bank Secrecy Act (BSA) and sanctions frameworks being applied to crypto. Laz emphasized that when it comes to crypto legislation & regulation, we should remember that with DeFi, we are dealing with software, not intermediaries.
Laz also reminded the audience that most members of Congress do not have a firm grasp of DeFi due to the vast array of issues they must constantly address. To that end, Laz encouraged founders and developers to meet with their representatives on the Hill. “What a lot of folks in Congress want to see or what they want to know” from their constituents, Laz said, is if “you’re building something that you believe benefits the world.”
DEF encourages DeFi developers, builders, innovators, and investors to get involved in the legislative process. If you are interested in this, please get in touch.
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