- President Trump signed the first-ever U.S. crypto bill, repealing the IRS DeFi broker rule.
- The repealed rule required DeFi platforms to report user data like traditional financial brokers.
- Lawmakers and industry leaders argued the rule was unworkable and harmful to U.S. innovation.
President Donald Trump on Thursday signed a bill into law repealing a controversial IRS rule that expanded broker reporting obligations to decentralized finance (DeFi) platforms. The legislation is the first ever U.S. crypto-specific bill that has been signed by a U.S. president.
The bill passed both chambers of Congress on bipartisan grounds IN March as it nullified the Biden-era regulation via the Congressional Review Act. Just like traditional financial brokers, the now-repealed rule required DeFi platforms to report user data, along with crypto transaction details.
DeFi Rule Overturned After Industry and Lawmaker Pushback
The rule was introduced by the Internal Revenue Service late in 2023 and was finalized during early 2024. Under the 2021 Infrastructure Investment and Jobs Act, it also extended tax reporting requirements for the DeFi protocols. However, critics warned that the rule was technically unworkable, because DeFi protocols don’t have a centralized control or intermediary.
Industry figures and lawmakers from both parties argued that the rule would undermine privacy, stifle innovation, and impose compliance demands that DeFi platforms could not fulfill. The legislation’s repeal was championed by Representative Mike Carey (R-Ohio), who attended the signing ceremony.
Crypto advocates pointed out that the requirement for platforms to provide information on gross proceeds and user data completely missed the point, given the nature of DeFi stands on automated systems. The working of these systems is based on smart contracts that do not involve the manual customer onboarding or identity validation systems.
White House crypto advisor David Sacks described the IRS policy as a “midnight regulation” that overreached by targeting decentralized platforms. He said the rule raised concerns about privacy and burdened both developers and users with unrealistic compliance expectations. Senator Cynthia Lummis also applauded the move, writing on X: “Grateful to have a president who wants America to lead the way on Bitcoin and digital assets!”
Legal Shift Signals Regulatory Reset for Digital Assets
Trump’s recent signature ends a policy that had been completed in the final weeks of the Biden administration. The structure to which the IRS framework was designed is to close tax gaps in the crypto sector, but opponents argued that it was never a good match for the decentralized systems.
The bill’s success followed coordinated lobbying efforts by crypto advocacy groups and high-profile legal experts who emphasized the incompatibility between DeFi and traditional broker regulations. Supporters said the IRS had no means to enforce the rule without fundamentally altering how DeFi protocols work.
Supporters of the repeal claimed they were worried about enforcement burdens during tax season. They said that IRS cannot process new volumes of tax data coming from DeFi transactions, which are often pseudonymous and high volume. Crypto policy advocates called the repeal a landmark in U.S. digital asset legislation. Amanda Tuminelli of the DeFi Education Fund said the move represented “digital asset regulatory history” and highlighted a shift toward more tailored approaches to blockchain technology.
Thursday’s signing is the second major crypto-related action from the Trump administration in recent months. The president in March issued an executive order to set up a federal cryptocurrency working group. It also ordered the development of a national bitcoin reserve.
The DeFi broker repeal is part of a broader shift in federal crypto policy. With new leadership at the SEC and a pro-crypto White House, agencies are revisiting enforcement strategies and compliance expectations.
