Trump Repeals Biden-Era IRS Crypto Rule, Boosts DeFi Industry

Donald Trump has made a significant move in the realm of cryptocurrency by signing the first crypto-related bill into law, effectively repealing an IRS rule from the Biden administration. This rule, known as the DeFi broker rule, would have required decentralized finance (DeFi) platforms to collect and report taxpayer information similar to traditional brokers. The repeal of this rule marks a significant victory for the crypto industry, which had vehemently opposed the IRS's attempt to impose stringent tax reporting requirements on DeFi protocols.

The bill, which received bipartisan support in both the House and Senate, was signed into law during a ceremony attended by U.S. Representative Mike Carey. Carey highlighted that the repeal of the rule allows the IRS to refocus on its existing duties and obligations to American taxpayers. He also criticized the DeFi broker rule for hindering American innovation, infringing on the privacy of everyday Americans, and overwhelming the IRS with an influx of new filings that it was not equipped to handle.

Industry leaders and pro-crypto lawmakers had strongly objected to the IRS rule since its announcement. They argued that DeFi protocols, which operate on automated code, were incapable of complying with the tax reporting requirements designed for traditional brokers. Despite these objections, the IRS implemented the rule in the final days of the Biden administration, further fueling the industry's frustration.

The Trump administration had thrown its support behind the measure to repeal the rule, with White House AI and crypto czar David Sacks criticizing it as a "midnight regulation" of the Biden era. Sacks argued that the rule would stifle American innovation, raise privacy concerns, and impose an unprecedented compliance burden on American DeFi companies.

The signing of the resolution eliminating the rule was hailed as a major milestone by crypto policy leaders. Amanda Tuminelli, Executive Director of the DeFi Education Fund, described the event as a critical signal change for the crypto industry, indicating that the U.S. has embraced a sensible, forward-thinking approach to digital assets. This move is expected to foster a more favorable regulatory environment for the crypto industry, encouraging innovation and protecting the privacy of users.