The rule would stifle American innovation and raise privacy concerns over the sharing of taxpayers’ personal information while imposing an unprecedented compliance burden on American DeFi companies.
President Donald Trump has signed a resolution officially repealing a contentious tax rule introduced during the final days of the Biden administration. The now-defunct rule would have required decentralized finance (DeFi) platforms to collect and report user data to the IRS, aligning them with traditional financial brokers.
A Bipartisan Pushback
The resolution—H.J.Res.25—was introduced by Republican Senators Ted Cruz (Texas) and Mike Carey (Ohio) and gained bipartisan support despite its origins in a deeply divided Congress.
The White House described the repealed rule as a “midnight regulation,” hastily pushed through in the closing weeks of the previous administration. Senator Carey, present at the signing ceremony, noted that this marks the first-ever crypto-related bill to be signed into law.
“By repealing this misguided rule, President Trump and Congress have given the IRS an opportunity to return its focus to the duties and obligations it already owes to American taxpayers,” Carey said.
The Rule: What Was at Stake
The original IRS regulation, titled “Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales,” sought to redefine “broker” to include non-custodial entities—namely DeFi platforms and digital asset interfaces.
If enacted, the rule would have required:
- Collection of user identities
- Disclosure of transaction histories
- Filing of Form-1099 for all crypto sales
DeFi developers and platforms argued this level of compliance is incompatible with the decentralized nature of their operations, many of which operate via smart contracts without a central intermediary.
Crypto Industry Applauds the Move
Industry leaders, crypto advocates, and privacy-focused lawmakers voiced strong opposition to the rule from its inception. They argued that not only would it cripple American DeFi innovation, but it also posed serious privacy risks and could overwhelm the IRS with compliance data it lacks the capacity to handle.
“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,” said Rep. Mike Carey.
White House AI and crypto adviser David Sacks echoed this sentiment, stating the rule would have “stifled innovation” while placing an unprecedented burden on U.S. crypto companies.
What Happens Now?
With Trump’s signature, H.J.Res.25 becomes law, and the IRS rule is effectively nullified. DeFi platforms and digital asset brokers will no longer be required to collect or report gross proceeds data under the expanded broker definition.
The crypto industry sees this as a victory, one that could signal a more innovation-friendly policy stance under the Trump administration.
Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or investment advice.
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