Trump Signs Bill Repealing IRS Rule Targeting DeFi: Understanding the Impact
Date: April 10, 2025
By: Aleks Gilbert
In a significant legislative move for the cryptocurrency world, U.S. President Donald Trump officially signed a bipartisan bill on Thursday that repeals a controversial Internal Revenue Service (IRS) rule designed to regulate decentralized finance (DeFi) platforms. This legislation marks Trump’s first crypto-focused law since taking office.
Repeal of the DeFi Broker Rule
The legislation specifically targets a rule that was introduced during the last days of the Biden administration. This rule classified numerous websites and wallets that facilitate the swapping of cryptocurrencies as "brokers." Notably, popular platforms such as MetaMask and decentralized exchange Uniswap, which provide user-friendly access to DeFi protocols, would have been affected by the rule without applying to the underlying decentralized finance protocols themselves.
According to the now-repealed rule, DeFi applications and wallets would have been required to collect extensive amounts of customer data as part of efforts to curb tax evasion and assist users in filing their taxes with the IRS. Representative Mike Carey, a Republican from Ohio and the bill’s sponsor, criticized the regulation, stating that it "needlessly hindered American innovation," violated individual privacy, and threatened to inundate the IRS with excessive paperwork during tax season.
Originally, the proposal aimed to regulate DeFi protocols comprehensively, prompting strong objections from the cryptocurrency community. However, the finalized version of the rule was adjusted to only apply to front-end services, which engage directly with users.
Implications for the Cryptocurrency Community
At the moment, the DeFi ecosystem is significantly robust, boasting over $114 billion in crypto assets deposited across various DeFi protocols, as tracked by DefiLlama. The popularity of user-friendly platforms plays a crucial role in making DeFi accessible to users with limited technical expertise. The now-repealed IRS rule posed a potential existential threat to this burgeoning industry, according to warnings from legal experts and developers.
The bill to repeal the rule passed through Congress with surprising ease, garnering support from a majority of Republicans and a considerable number of Democratic lawmakers. Despite some concerns raised by Democrats, including Representative Richard Neal of Massachusetts, who argued that the repeal could enable tax evasion by cryptocurrency traders, the legislation progressed smoothly. Neal estimated that repealing the rule would cost the U.S. government approximately $4 billion.
A Bipartisan Commitment to Innovation
Supporters of the bill, including Amanda Tuminelli, head of the crypto advocacy firm DeFi Education Fund, emphasized the importance of fostering innovation and preserving the rights of individuals to decide how they conduct their financial transactions. Tuminelli remarked that the bipartisan nature of the vote underscores a national commitment to supporting technological advancements.
As the cryptocurrency landscape continues to evolve, the repeal of the IRS rule represents a key moment for the DeFi sector and its ongoing development. The legislative change aims to ease regulatory burdens on decentralized finance applications, encouraging broader participation and innovation in the cryptocurrency space.
This move could lead to further discussions regarding the regulatory framework surrounding cryptocurrency, as more stakeholders begin to explore the balance between ensuring compliance and promoting technological growth.
Aleks Gilbert is DL News’ New York-based DeFi reporter. For inquiries, contact him at [email protected].
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