Trump, Signs Repeal Of Defi Tax Regulations…U.S. Cryptocurrency Regulation Easing Begins In Earnest

Congressman Mike Carey announcing President Trump's repeal of DeFi tax regulation (Source: @RepMikeCarey, X)

On the 10th (local time), U.S. President Donald Trump signed a joint resolution repealing the Biden administration's regulation that mandated DeFi (DeFi) protocols to report cryptocurrency transaction information to the IRS. This measure officially abolishes the 'DeFi Broker Rule' which was a subject of much controversy in the cryptocurrency industry.

The abolished regulation was scheduled to be implemented from 2027 and required DeFi platform operators to report the total revenue and user information to the IRS when selling cryptocurrency. This was interpreted as an attempt to expand the standards of traditional brokers to the DeFi ecosystem.

This resolution was officially enacted after passing the House and Senate on March 11 and 26, respectively, and receiving President Trump's final signature. By signing this resolution, Trump became the first President in U.S. history to sign a cryptocurrency-related legislative bill. Congressman Mike Carey, a Republican who co-sponsored the bill, pointed out "This regulation threatened to stifle U.S. technological innovation, violate individual privacy, and overwhelm the IRS's processing capacity."

The DeFi Broker Rule faced strong opposition from the tech industry and the cryptocurrency community since its inception. Opponents criticized the regulation as overly broad and an attempt to enforce regulations while ignoring the structural characteristics of decentralized systems. On the other hand, some Democratic lawmakers warned that if this regulation is repealed, wealthy taxpayers might use DeFi as a means of tax evasion.

Regarding this decision, Kristin Smith, head of the U.S. Blockchain Association, said, “The entire industry can breathe again,” and evaluated, “This regulation was a dangerous approach that could virtually collapse the U.S. cryptocurrency industry.” The association previously filed a lawsuit against the IRS and the Treasury in December, arguing that the regulation was unconstitutional.

The Trump administration has taken a more favorable approach to the cryptocurrency industry since its inception. Recently, it has been reported that the Securities and Exchange Commission (SEC) has withdrawn a number of cryptocurrency-related sanctions promoted during the Biden administration and has started new consultative procedures with the industry.

This regulatory repeal is likely to be recorded as the first legislative case that formalizes the Trump administration's 'pro-cryptocurrency stance'. The industry is watching whether this stance can spread to other cryptocurrency-related fields such as stablecoins and NFTs.