Crypto: On Thursday, President Donald Trump signed a resolution into law that overturns a controversial rule from the Biden administration, which would have expanded tax reporting requirements for digital asset transactions. The rule, introduced by the IRS in December 2024, was intended to broaden the definition of a “broker” to include decentralized cryptocurrency exchanges, a move that raised significant concerns across the crypto industry.
Lawmaker Praises President Trump for Repealing the Rule
The resolution to repeal the rule was introduced by Representative Mike Carey (R-Ohio), a member of the House Ways and Means Committee. Known as the “DeFi Broker Rule,” the regulation would have required decentralized finance (DeFi) brokers to report the gross proceeds from digital asset sales on Form 1099, subjecting them to the same reporting standards applied to centralized brokers like Coinbase and Kraken. Centralized exchanges act as intermediaries between buyers and sellers, while DeFi exchanges allow users to transact directly on blockchain networks without a third-party intermediary.
In a statement, Rep. Carey praised President Trump for signing the resolution, emphasizing that the rule would have hindered innovation, infringed on privacy, and created significant administrative burdens for the IRS.
“The DeFi Broker Rule needlessly hindered American innovation, infringed on the privacy of everyday Americans, and was set to overwhelm the IRS with an overflow of new filings that it doesn’t have the infrastructure to handle during tax season,” said Carey. “By repealing this misguided rule, President Trump and Congress have given the IRS an opportunity to return its focus to the duties and obligations it already owes to American taxpayers.”
Concerns Over Feasibility of Compliance for DeFi Exchanges
The IRS had argued that the rule would help reduce “inadvertent errors or noncompliance” on tax returns and ensure uniformity in reporting among all taxpayers. The agency explained that while the rule didn’t create new tax obligations, it aimed to standardize reporting and ensure that taxpayers included gains from the sale or exchange of digital assets in their income. However, the rule’s application to decentralized exchanges, which do not collect user information like centralized platforms, raised concerns about the feasibility of compliance.
The rule, finalized late in the Biden administration, quickly drew criticism from both the crypto industry and lawmakers. Industry groups like the Blockchain Association expressed fears that the rule represented regulatory overreach and would harm U.S. leadership in decentralized finance (DeFi). A February letter to lawmakers from the Blockchain Association described the rule as “misguided” and warned it could “undermine our nation’s competitive edge in financial technology innovation.”
Also Read: US-Imposed Tariffs Slash: Malaysia’s Bold Strategy for Trade Victory
Crypto Industry Leaders Celebrate the Repeal
The concerns were echoed by lawmakers across party lines, leading to a bipartisan vote in both the House and Senate to overturn the rule using the Congressional Review Act. This law allows Congress to nullify certain federal regulations with a simple majority. Both chambers voted to invalidate the revision, and Trump’s signature finalized the repeal, providing relief to the crypto community.
Trump, who had previously pledged to be a “crypto president” during his campaign, has consistently advocated for promoting the adoption of digital assets and reducing regulatory burdens on the sector. His decision to overturn the rule has been welcomed by leaders within the crypto industry.
Former Blockchain Association CEO Kristin Smith called the rule a “sledgehammer to the engine of American innovation,” expressing gratitude for the law’s repeal. “On behalf of our members, and the entire industry, we’re grateful to have this harmful rule off the books for good,” she said.
The repeal of the DeFi Broker Rule marks a significant victory for the cryptocurrency industry, which has faced increasing regulatory scrutiny in recent years. With the rule now overturned, industry stakeholders can breathe a sigh of relief, knowing that one major regulatory threat has been removed.
Final Thought
The digital asset sector continues to grow, it remains to be seen what future regulatory measures will be implemented, but for now, the repeal of the DeFi Broker Rule has been hailed as a positive step toward fostering innovation and ensuring that the U.S. remains a global leader in the cryptocurrency and blockchain space.
Click Here for more business news.
