Summary
-
President Trump signed the first-ever crypto-related bill into US law, overturning a Biden-era IRS rule targeting decentralized finance (DeFi) platforms.
-
The repealed IRS rule would have imposed traditional broker-like tax reporting requirements on DeFi, which was criticized for being impractical, privacy-invasive, and detrimental to innovation.
-
Industry leaders and the Trump administration hailed the repeal, viewing it as a major victory that protects American crypto innovation and signals a more forward-thinking US approach to digital assets.
President Donald Trump has become the first U.S. president to enact a cryptocurrency-related bill into law.
On Thursday, he signed legislation eliminating an IRS rule established during the Biden administration.
This rule would have required decentralized finance (DeFi) platforms to adhere to the same tax reporting standards as traditional financial brokers.
Resolution Overturns Controversial “DeFi Broker Rule”
This legislation is significant, marking not only Trump’s first crypto law but also the first of its kind signed by any U.S. president.
The resolution specifically targets and nullifies the IRS’s “DeFi broker rule,” initially proposed in 2023 under the Biden administration.
DeFi encompasses a range of cryptocurrency applications that enable users to conduct trading, borrowing, or lending of digital assets without relying on conventional intermediaries like banks.
Administration Cites Protection of Innovation and Privacy
Bo Hines, executive director of the President’s Working Group on Digital Assets, stated that they appreciate President Trump signing this critical resolution into law and safeguarding digital asset innovation in America.
In a statement, Hines added that by repealing the IRS’s DeFi broker rule, the administration has ensured that developers and decentralized platforms will not face impractical reporting demands.
These demands, according to Hines, posed privacy threats and risked driving innovation away from the U.S.
Repeal Praised as Step Towards Crypto Capital Status
Hines further emphasized that this action represents a major advancement in financial technology growth and reinforces the United States’ position as a leader in the crypto sector.
U.S. Representative Mike Carey (R-Ohio), present at the signing event, commented that this repeal offers the IRS an opportunity to refocus on its existing responsibilities to American taxpayers.
Bipartisan Support Underscores Broad Opposition to IRS Rule
Carey stated that the DeFi Broker Rule unnecessarily hampered American innovation, violated the privacy of average Americans, and was poised to overload the IRS with excessive new filings.
He argued the IRS lacks the infrastructure to manage such volumes during tax season.
The repeal gained notable bipartisan support in both the House and Senate last month.
This bipartisan agreement, achieved quickly after a change in presidential administrations, highlights a willingness from both Democrats and Republicans to challenge prior policies related to digital assets.
Industry Leaders Argued Rule Was Unworkable for DeFi
Industry leaders voiced strong opposition to the IRS rule immediately after its announcement, asserting that it would cripple DeFi operations within the United States.
Critics contended that decentralized finance protocols, based on automated code, could not inherently comply with the complex tax reporting requirements designed for traditional brokers.
Despite these objections, the IRS implemented the rule in the final period of the Biden presidency, prompting significant criticism from both industry figures and pro-crypto legislators.
Trump Administration Denounced “Midnight Regulation”
The Trump administration signaled support for overturning the rule last month.
David Sacks, a White House advisor on AI and crypto, criticized the IRS DeFi rule as a “midnight regulation” enacted at the end of the Biden administration.
Sacks argued the rule would impede American innovation, raise privacy concerns regarding taxpayer information sharing, and place an unmanageable compliance burden on American DeFi companies.
Crypto Industry Hails Law as “Critical Signal Change”
Following the resolution’s signing on Thursday, crypto policy leaders acclaimed Trump’s action as a major achievement for the industry.
Amanda Tuminelli, Executive Director of the DeFi Education Fund, a crypto lobbying organization, described it as a historic day for digital asset regulation in the U.S.
Tuminelli added that President Trump’s signature represents a critical shift in approach for the crypto industry, indicating that the U.S. is embracing a sensible and progressive approach to digital assets.
Also Read: Donald Trump suspends US assistance to South Africa due to its land seizure plans
*Disclaimer*: We at Bitcoinleef.com present you with the latest information in the crypto market. However, this information should not be regarded as financial advice and viewers should consult their financial advisors before investing.
Wallets