On Thursday, President Donald Trump signed a bill into law, marking the first instance of a U.S. President enacting cryptocurrency-related legislation.
The law officially reverses an IRS regulation from the Biden administration that would have imposed broker-like tax reporting duties on decentralized finance (DeFi) platforms.
The signed bill represents not only President Trump‘s first crypto-related law but also the first such law in U.S. presidential history.
Resolution Overturns DeFi Broker Rule
The resolution specifically targets and eliminates the IRS “DeFi broker rule.”
This rule, initially proposed by the Biden administration in 2023, aimed to apply existing tax reporting requirements for brokers to DeFi.
DeFi refers broadly to crypto-based applications enabling users to trade, borrow, or lend assets without traditional financial intermediaries like banks.
Administration Celebrates Bill as Pro-Innovation, Pro-Privacy
Bo Hines, Executive Director of the President’s Working Group on Digital Assets, expressed gratitude for President Trump’s signing of the resolution.
He stated it protects American digital asset innovation.
Hines elaborated that by repealing the IRS’s DeFi broker rule, the administration prevents developers and decentralized platforms from facing unworkable reporting mandates.
These mandates were considered a threat to privacy and could have pushed innovation outside of the United States.
Bill Seen as Boost to US Crypto Leadership
Hines further emphasized the bill as a significant stride forward for financial technology advancement.
He believes it secures the United States’ leading position in the global crypto space.
Representative Mike Carey (R-Ohio), present at the signing, remarked that the repeal allows the IRS to refocus on its existing responsibilities to taxpayers.
Bipartisan Support Shows Wide Agreement Against IRS Rule
Carey argued the DeFi Broker Rule unnecessarily obstructed American innovation and invaded the privacy of ordinary Americans.
He also pointed out it would have overwhelmed the IRS with new filings beyond its infrastructure capacity during tax season.
Last month, the repeal received substantial bipartisan support in both the House and Senate, highlighting a cross-party rejection of the previous administration’s policy on digital assets shortly after the presidential transition.
Industry Leaders Argued Against DeFi Rule’s Practicality
Upon its announcement, industry leaders immediately and strongly opposed the IRS rule.
They contended that it would effectively cripple DeFi in the US.
Critics asserted that DeFi protocols, operating on automated codes, are inherently unable to meet the complex tax reporting standards designed for traditional brokers.
Nevertheless, the IRS implemented the rule near the end of the Biden administration’s term, sparking frustration from both the crypto industry and supportive lawmakers.
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