Trump Overturns IRS DeFi Rule With Landmark Crypto Bill

DeFi Rule Repealed in Landmark Win for Crypto Industry

President Donald Trump signed H.J.Res.25 into law on April 11, 2025, marking the first time in American history that a crypto-focused bill has been enacted. The move officially overturns the IRS’s controversial DeFi broker rule and signals a dramatic shift in Washington’s stance toward decentralized finance. The legislation not only makes Trump the first U.S. president to codify a cryptocurrency measure but also establishes a critical precedent under the Congressional Review Act (CRA), becoming the first tax-related CRA of Disapproval to take effect.

The law targets and repeals the IRS regulation titled “Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales,” a rule introduced during the Biden administration in late 2023. That rule sought to impose traditional brokerage reporting obligations on decentralized finance protocols and front-end service providers, effectively labeling them as brokers. Under this framework, DeFi projects would have been required to collect sensitive user data and report all crypto sales using Form 1099, regardless of whether the platform had the technical ability to do so.

Widespread criticism emerged almost immediately from within the crypto industry and across Capitol Hill. Industry leaders denounced the regulation as fundamentally incompatible with how DeFi operates. Non-custodial platforms—those governed by code rather than centralized control—were seen as structurally incapable of fulfilling broker-like duties. Bo Hines, Executive Director of the President’s Working Group on Digital Assets, described the IRS mandate as a direct threat to privacy and innovation, stating that its repeal “ensured that developers and decentralized platforms won’t be subjected to unworkable reporting requirements that threaten privacy and push innovation offshore.”

Amanda Tuminelli, Executive Director of the DeFi Education Fund, called the repeal a critical turning point. “President Trump’s signature is a critical signal change for the crypto industry: the U.S. has embraced a sensible, forward-thinking approach to digital assets,” she said. The repeal also received broad legislative support. Initially introduced in December 2024 by Representative Mike Carey of Ohio and Senator Ted Cruz, the resolution passed the Senate on March 4, 2025, and was swiftly approved by the House the following week. Its final hurdle—a second Senate vote due to budgetary impacts—was cleared just days before landing on Trump’s desk.

The Trump administration had consistently voiced support for the resolution. David Sacks, who serves as the administration’s Crypto Czar, blasted the rule as a last-minute maneuver by the outgoing administration. “Stifle American innovation and raise privacy concerns over the sharing of taxpayers’ personal information, while imposing an unprecedented compliance burden on American DeFi companies,” Sacks said, describing the regulation as a “midnight rule” designed to expand regulatory reach before the change in leadership.

By law, the IRS is now barred from reissuing any substantially similar rule unless Congress explicitly authorizes it in future legislation. This effectively prevents the agency from revisiting comparable enforcement strategies without renewed political backing, giving DeFi entities a temporary but meaningful regulatory shield. The move is also seen as reinforcing Trump's broader deregulatory and pro-crypto agenda, a cornerstone of his 2024 campaign that promised to promote American innovation and position the U.S. as a global leader in digital assets.

Policy experts and industry voices see the repeal as a defining moment in the evolution of digital asset legislation. Bo Hines referred to it as evidence that the U.S. is becoming the “crypto capital of the world.” The Blockchain Association and other advocacy groups have welcomed the bill as a victory for technological autonomy, decentralization, and regulatory sanity—offering a clear indication that the highest levels of government now recognize and support the unique structure and promise of decentralized finance.

This article has been refined and enhanced by ChatGPT.