In a move that’s making waves across the cryptocurrency industry, President Donald Trump has officially revoked a controversial IRS rule that sought to expand the definition of a “broker” to include decentralized crypto exchanges. This decision, signed into law last Thursday, marks a sharp reversal from tax enforcement efforts initiated under the previous administration.
The rule, finalized by the IRS in late 2024, was designed to tighten tax reporting requirements in the rapidly evolving world of digital assets. Specifically, it aimed to include DeFi platforms—blockchain-based protocols that enable users to trade cryptocurrencies without a traditional intermediary—under the same rules as centralized exchanges like Coinbase or Kraken.
But here’s the catch: DeFi systems operate without a middleman. So who, exactly, would file reports to the IRS?
Why the crypto industry pushed back
Many in the crypto community argued that the IRS’s expanded definition was simply unworkable. Unlike centralized exchanges, DeFi platforms don’t have direct control over user identities or transactions. That makes it nearly impossible for them to comply with standard tax reporting requirements.
Imagine trying to fill out tax forms for people you’ve never met, whose data you can’t access, on a platform that’s governed by smart contracts rather than a company. That’s essentially what DeFi developers were being asked to do.
According to several industry advocates, the rule not only threatened the viability of decentralized finance, but also risked stifling innovation in one of the most dynamic sectors of the tech economy.
Congress steps in—with bipartisan support
The pushback didn’t fall on deaf ears. In March, both the House of Representatives and the Senate voted to repeal the IRS rule under the Congressional Review Act, a legislative tool that allows Congress to overturn federal regulations with a simple majority. The bipartisan vote underscored how regulatory overreach in the crypto space is becoming a rare point of consensus in an otherwise divided Washington.
With Trump’s signature, the repeal is now official—leaving crypto developers, investors, and DeFi users breathing a sigh of relief.
Part of a broader crypto pivot by Trump
This move isn’t just about taxes—it fits into a larger shift in Trump’s approach to digital currencies. On the campaign trail, he promised to be a “crypto-friendly president,” openly courting industry donors and pledging to promote blockchain innovation.
Just days into his new term, Trump ordered the creation of a cryptocurrency task force to propose updated federal regulations on digital assets. And in March, he went a step further by signing an executive order calling for the establishment of a federal bitcoin reserve, a move that stunned traditional economists but thrilled some parts of the crypto world.
What does this mean for crypto investors?
For the average crypto investor, the rollback of the IRS rule means one thing above all: less reporting pressure, at least for now. But it also opens the door to regulatory uncertainty, as the administration works on crafting a new legal framework.
Investors should keep an eye on developments from the newly created task force and be prepared for future compliance changes. While Trump’s policies may offer more breathing room in the short term, the need for clear and enforceable tax guidelines hasn’t gone away.
Still, this repeal is seen as a strong signal that the U.S. may be heading toward a more accommodating regulatory environment for cryptocurrencies—and particularly for the DeFi ecosystem, which has long struggled with unclear legal expectations.
As always, in the crypto world, one thing remains constant: change.
