In a landmark move, US President Donald Trump on April 10 signed into law a resolution repealing the IRS’s controversial “DeFi Broker Rule” and effectively blocked expanded tax reporting requirements for decentralized finance platforms.

The measure, introduced by Representative Mike Carey (R-Ohio) and supported in the Senate by Senator Ted Cruz (R-Texas), used the Congressional Review Act (CRA) to reverse the IRS rule finalized in late 2024. The law now prevents similar regulations from being reintroduced without new legislation.

DeFi Broker Rule Scrapped

The IRS rule in question aimed to broaden the definition of a “broker” to include developers of self-custodial wallets and DeFi applications – platforms that allow users to exchange digital assets directly without intermediaries.

Originally stemming from the 2021 Infrastructure Investment and Jobs Act, the rule sought to close perceived tax gaps in crypto trading by requiring these entities to report user transaction data to both the IRS and taxpayers. It was scheduled to take effect in 2027.

Critics argued that the rule was incompatible with how decentralized platforms operate. Unlike traditional brokerages, DeFi platforms typically do not collect or store personal information, which would make compliance with IRS reporting standards technically unfeasible.

Industry experts also warned that the rule could drive innovation offshore, as developers and companies might relocate to jurisdictions with less stringent oversight. Supporters of the rule, including some Democratic lawmakers, maintained that without such requirements, high-income crypto investors could exploit regulatory loopholes to avoid taxation.

Representative Carey hailed the repeal as a win for innovation and taxpayer privacy. He also praised President Trump’s support, aligning it with the administration’s broader pro-crypto agenda.

“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. I thank President Trump for signing this important bill into law and Crypto Czar Sacks for his leadership in supporting America’s continued place as the global leader in the emerging crypto industry.”

Regulatory Reset

Since returning to office, Trump has formed a federal crypto task force and advocated for policies that encourage blockchain development.

The bill’s swift passage through Congress – clearing the House on March 11 and the Senate on March 26 – signals growing momentum within the Republican-led legislature to scale back regulatory intervention in crypto markets.

The Trump administration has adopted a more supportive stance on cryptocurrency and has signaled a complete shift in regulatory posture by scaling back the Securities and Exchange Commission’s (SEC) aggressive approach under former Chair Gary Gensler.

Several investigations and legal actions initiated against crypto companies during the Biden era have been dropped, and the securities regulator has started engaging with industry players to reassess its regulatory framework.

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