President Donald Trump has officially signed a new law that repeals a controversial rule created by the Internal Revenue Service (IRS) during the final days of the Biden administration.
The rule would have forced decentralised finance (DeFi) platforms to collect and report customer transaction data, much like traditional financial institutions.
According to a press release by Representative Mike Carey, who introduced the bill along with Senator Ted Cruz last December, this signing marks two firsts: it is the first cryptocurrency-related bill ever signed into law and the first tax-related Congressional Review Act (CRA) of Disapproval to become law.
“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 that it doesn’t have the infrastructure to handle during tax season”, Rep. Carey said.
“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 instead of creating a new series of bureaucratic hurdles”, he added.
Carey also thanked President Trump for signing the bill and praised Crypto Czar David Sacks for his leadership in protecting America’s position in the global crypto industry.
The measure, known as H.J.Res.25, nullifies the IRS’ “Gross Proceeds Reporting by Brokers That Regularly Provide Services Effectuating Digital Asset Sales” rule.
This rule had expanded the definition of “broker” to cover non-custodial entities like DeFi platforms and trading front-end providers, forcing them to report gross proceeds and collect taxpayer information, including identities and transaction histories.
Now, because of this new law, the IRS rule will have “no force or effect”, removing the need for DeFi platforms and digital asset brokers to report crypto sales through Form-1099.
It also lifts heavy compliance requirements that critics, such as the Blockchain Association, said would hurt innovation in the crypto sector.
How did the repeal happen?
The measure first cleared the Senate on 4 March and then passed through the House the following week. Due to its link to a budgetary matter, it needed another final vote in the Senate before reaching President Trump’s desk.
The Senate voted to repeal the IRS rule on 26 March. The Congressional Review Act, which was used to overturn the rule, prevents the IRS from issuing a substantially similar regulation in the future without new approval from Congress.
Trump’s decision to sign the bill is in line with his broader deregulatory stance towards new technologies, including digital assets, which he has embraced during his 2024 presidential campaign and second term.
Earlier, the White House had already expressed support for the repeal. In a statement issued on 4 March, it said the Biden-era rule hurt American innovation, raised privacy concerns, and created an unreasonable burden on DeFi companies.
Rep. Carey, who attended the signing ceremony, reiterated that repealing the IRS rule allows the agency to focus on its primary responsibilities without being burdened by unnecessary new regulations.
“This misguided rule was about to overwhelm the IRS with filings it simply couldn’t handle during tax season”, Carey added.
Senator Ted Cruz and Representative Mike Carey, both Republicans, had introduced the resolution earlier this year, arguing that the rule unfairly treated decentralised platforms as if they were traditional financial brokers.
They said that DeFi projects would not be able to comply with these requirements because DeFi protocols run automatically without controlling customer data.
Industry response and impact on DeFi
The repeal has been widely welcomed by crypto industry leaders and advocates. The Executive Director of the DeFi Education Fund, Amanda Tuminelli, said in a statement:
“The DeFi Education Fund commends all members of Congress who supported this resolution, recognising the importance of protecting software developers and promoting the development of decentralised technologies.”
She also noted: “President Trump’s signature is a critical signal change for the crypto industry: the United States has embraced a sensible, forward-thinking approach to digital assets”.
Tuminelli’s comments underline the sense of relief across the DeFi space. Many feared that the IRS rule would destroy DeFi in the United States by forcing projects to comply with requirements that simply do not fit their decentralised nature.
Under the repealed rule, DeFi platforms, developers, and even websites that acted as user-friendly front-ends to DeFi protocols would have been expected to collect users’ private trading data and send out Form-1099 tax reports—something more suited to traditional financial institutions like stockbrokers.
According to the US Treasury Department, the final rule applied not only to custodial brokers but also to “front-end service providers” who interact directly with users.
This would have included platforms providing access to decentralised protocols without necessarily running them.
Critics argued that such a requirement would fundamentally change the decentralised and open-source structure of DeFi. Privacy advocates also raised concerns that forcing platforms to collect this much information would lead to unnecessary surveillance of average users, putting civil liberties at risk.
Even beyond privacy and technical hurdles, many in the industry felt that the IRS was demanding something that decentralised platforms technically could not deliver. After all, DeFi protocols typically operate through code, not through businesses that collect and store personal user data.
Sacks also criticised the IRS rule when supporting the repeal. He called it a “midnight regulation” from the Biden era, saying it 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”.
A major shift in US crypto policy
Trump’s signature on the repeal marks a major moment for crypto regulation in the US. It shows a clear policy shift towards a more supportive approach to digital assets and decentralised technologies.
It also gives DeFi developers, users, and projects much-needed breathing room. Without the heavy reporting requirements, the DeFi sector can continue to innovate without fear of penalties for failing to meet impossible standards.
Industry stakeholders, including the DeFi Education Fund and other crypto advocates, celebrated the move as a long-overdue victory. They see the repeal as not just protection for innovation, but also as a defence of user privacy and decentralised technologies.
The bipartisan support the measure received also points to a broader recognition among lawmakers—both Republican and Democrat—that crypto needs a regulatory approach that reflects its unique nature rather than treating it like traditional finance.
In the words of Amanda Tuminelli: “Digital asset regulatory history was made in the US today”. The repeal also sends a strong message internationally: the United States intends to stay at the forefront of crypto innovation, using regulatory frameworks that encourage growth rather than stifling it.
With this development, the crypto industry now has a clearer path forward, at least for the near future, without the immediate threat of burdensome IRS reporting requirements hanging over decentralised platforms.
