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Crypto’s IRS Victory Reveals Reach in Congress That Demands Less Compromise
U.S. crypto lobbyists watched with excitement in recent days as a pair of votes cemented what they’d hoped: Congress is on their side.
The industry that battled with pariah status just three years ago has staunch allies now in the White House and inside the U.S. financial agencies, and the recent votes in the Senate and House of Representatives on an Internal Revenue Service rule demonstrate that their support among lawmakers runs deep. So many Democrats joined the sector’s reliable Republican allies on those votes that crypto advocates suggest they may not have to give up much in negotiations over legislation that matters even more.
Just before he left office, former President Joe Biden’s IRS put a final stamp on a rule to pursue decentralized finance (DeFi) projects as brokers that would have to conduct the full range of tax reporting for users. The House and Senate both cast votes over the past week and a half under the Congressional Review Act to kill that rule, and both of those votes succeeded by massive margins, thanks to 19 Democrats in the Senate and 76 in the House who bucked the policy of their party’s administration.
With more than a third of Democrats on board in each chamber, there’s little reason to suspect those Democrats wouldn’t also be positively inclined to support other crypto topics.
«For years, we’ve been playing defense — trying to protect the industry from hostile regulators and relying on compromises that, in many cases, weakened the final legislative product,» said Kristin Smith, CEO of the Blockchain Association that advocates for pro-crypto policy in Washington. «But now we’re able to think a bit more expansively about what’s possible at the federal level.»
The digital assets bill that’s closest to completion is the effort to govern U.S. stablecoin issuers. With a House version getting a once-over in committee this week and the Senate’s version heading toward a potential sign-off by the Senate Banking Committee, the two chambers may soon find themselves voting on the finished legislation. In a period of extreme partisanship, crypto could be one of the few issues to stand on common ground.
As the details are hashed out, an industry that may once have been pressured into aggressive controls on anti-money-laundering systems in order to maintain the support of some Democrats could instead afford to press on without giving ground, crypto insiders are noting.
The industry’s bigger prize, though, is the future legislation that will once-and-for-all set a clear system of regulations for U.S. crypto trading and transactions, and for the businesses and projects that handle people’s digital assets needs. If Congress passes such a bill on the operation of the crypto markets, it eliminates any legal fumbling by federal agencies trying to fit existing laws onto the sector, and it would negate the need to look for answers in the courts.
Lawmakers are trying to build off previous efforts — most notably the Financial Innovation and Technology for the 21st Century Act (FIT21), which passed the House in the last session, but not the Senate. While a replacement effort may be further out than stablecoins, when it starts moving through this Congress, it could have a significantly easier path than its predecessor.
Even on the same day lawmakers were preparing for the ultimate partisan exercise as President Donald Trump prepared to make his recent address to Congress, the parties made their huge bipartisan showing in the Senate. That «rare and fleeting» congressional cooperation should allow the lawmakers to focus on the actual policy, Smith said.
How did crypto get here?
Congress was flooded with new allies after the 2024 elections, in which the industry-backed Fairshake political action committee expended about $139 million to help get pro-crypto lawmakers from both parties elected. Potentially as important in the ongoing legislative negotiations, though, is the fact that the super PAC is already sitting on $116 million (and growing) to do the same next year. As lawmakers approach their votes this year, they’ll know that a pro-crypto vote has a good chance of resulting in campaign dollars, and an opposition vote will likely result in spending aimed to snuff out their political careers.
The main sources of money behind Fairshake are Coinbase, a16z and Ripple Labs, with other backers including Jump Crypto and Uniswap Labs. Coinbase CEO Brian Armstrong said in an interview outside the White House crypto summit last week that his company will keep supporting Fairshake, which he said «did an incredible job.»
«Our supporters in this industry are deeply committed to this political strategy,» said Josh Vlasto, a spokesman for Fairshake, in an interview with CoinDesk. «We are seeing it in action now, and are going to continue to press forward.»
He said the IRS votes were «a direct result of that strategy,» which ignored politicians’ other views and party affiliations to focus only on whether they’d push for crypto bills.
«There’s tremendous political benefit in supporting the growth and smart regulation of the industry,» Vlasto said.
Even before the recent elections, FIT21 had earned major Democratic support in the House, and a separate effort to try to get rid of a Securities and Exchange Commission crypto accounting policy saw significant bipartisan support in both chambers. The industry was already making headway.
Then the course of the last congressional-election cycle saw a clear rise in voter experience with cryptocurrencies and an increasing interest that the space be regulated. Groups such as the Coinbase-backed Stand With Crypto have sought to tap into that crypto-interested segment of the population.
«That’s how we got this most pro-crypto Congress that we’ve ever seen,» Armstrong said.
The Solana Foundation nixed an ad widely criticized for being anti-queer late Monday, nearly nine hours after seemingly invoking the culture wars as a mechanism to boost conference attendance.
The now-deleted spot imagines «America» in therapy. A human embodiment of the nation desperately wants to think big – about tech, crypto, space travel. But he can’t: his therapist wants him to «focus on pronouns» and on «coming up with new genders.»
«America, numbers are non-binary,» the therapist insists after chiding his «rational thinking syndrome.» America eventually snaps and yells out, «I want to invent technologies, not genders.
That the Solana Foundation – a Swiss nonprofit whose mission is to evangelize the Solana blockchain – would call upon right-wing talking points to promote its first U.S. conference sparked immediate controversy. Some influential voices within Solanaland called it pandering; others, offensive.
It’s also a reversal for an organization that previously called diversity, equity and inclusion (DEI) part of its «core values» and insisted attendees of its flagship event show respect to others regardless of gender.
Just weeks before President Donald Trump retook the White House in part on an anti-trans campaign, the foundation held a conference in Singapore. The event’s code of conduct prohibited «deliberate verbal or physical intimidation» based on «gender,» «gender identity and expression,» or other traits often lumped in with DEI. It threatened infractors with ejection and a ban from attending future events.
«The Solana Foundation is committed to the principles of diversity, equity, inclusion, and respect,» the Code of conduct read.
It’s not clear whether the Solana Foundation’s ad strategy also portends a shift in its «core values.» CoinDesk could not immediately locate the code of conduct for the upcoming event. A representative for the Solana Foundation did not return a request for comment.
Regardless, the ad threatened to thrust crypto deeper into partisan politics than many in the industry are comfortable with.
The crypto industry’s embrace of President Trump had previously been an exercise of single-issue alignment: Trump promised to embrace crypto, and the industry’s high-rollers hugged him back. The arrangement has left room for proponents to work alongside Democrats too, and many have.
That bargain may begin to fall apart if crypto loses its ostensibly bipartisan sheen.
The main organizations supporting the Arbitrum blockchain, Offchain Labs and the Arbitrum Foundation, unveiled a new program designed to kick-start early-stage projects in the ecosystem.
The new program, «Onchain Labs,» is designed to provide go-to-market support to «experimental and volatile» projects, according to a blog post from Offchain Labs, Arbitrum’s main developer.
“Through Onchain Labs, we’re dedicating resources to support developers looking to rapidly expand the application layer by ideating with them from the ground floor to bring the best user experiences to Arbitrum,” the blog post said. “As we do with many Arbitrum teams, we’ll provide product and [go-to-market] support to these early-stage projects, collaborating closely to help their applications thrive on Arbitrum.”
Arbitrum Foundation is a non-profit that stewards Arbitrum ecosystem governance. Offchain Labs, which created the blockchain in 2021, focuses on developer tooling and core network infrastructure.
Offchain Labs is pitching its new initiative as a way to spur greater activity and interest in the wider Arbitrum ecosystem. According to the blog post from the company, the first Onchain Labs projects will soon emerge from stealth. Offchain Labs said the only projects supported by its new program will be those that explicitly «commit to fair and equitable launches» — presumably meaning they avoid token launches and other mechanics that preference insiders.
Offchain Labs stated in its blog post that the selection criteria are meant to avoid «extractive ecosystems» and «zero-sum games.» Tandem, Offchain Labs’ venture capital arm, «may or may not purchase associated tokens in public markets,» the company added.
Arbitrum is a layer-2 optimistic rollup network on Ethereum. Like other rollups, the chain is designed to process transactions faster and more cheaply than the main Ethereum blockchain. Several new blockchains are built on Arbitrum’s technical framework, forming a network of interconnected blockchains called Arbitrum ‘Orbit.’
Arbitrum is currently the largest layer-2 network on Ethereum, with roughly $12.2 billion on its primary ‘Arbitrum One’ chain, according to L2beat.
Read more: Arbitrum Deepens Ties with South Korea’s Lotte Group
Crypto exchange Gemini has appointed a new chief financial officer as it positions itself for a potential initial public offering.
The company’s latest hire, Dan Chen, who previously served as vice president of capital markets at Affirm, announced the move in a social media post.
«Crypto is the most dynamic sector in finance and Gemini is at the forefront of this revolution — making it simple and secure to engage on the digital asset frontier,» Chen wrote in the post.
Chen will work alongside Gemini co-founders Cameron and Tyler Winklevoss to help scale the business. The timing of the hire aligns with Gemini’s reported ambitions for an IPO, which would provide greater access to capital while subjecting the company to the transparency requirements of public markets.
Read more: Billionaire Winklevoss Twins-Backed Gemini Confidentially Filed for a U.S IPO: Bloomberg
If Gemini moves forward with the public listing process, it will be part of a small but growing number of crypto-native companies considering an IPO in the U.S. stock exchanges, including Kraken, Circle, Bullish (parent company of CoinDesk) and Blockchain.com
Gemini has not formally confirmed its IPO plans, but the appointment of a CFO with extensive experience in financial strategy suggests that preparations may be underway.
Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk’s full AI Policy.
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