Trump Blocks IRS DeFi Reporting Rule

Trump Blocks IRS DeFi Reporting Rule

President Donald Trump recently signed legislation nullifying an IRS rule that would have mandated decentralized finance (DeFi) platforms to report cryptocurrency transaction data and collect user information. This action, detailed in a press release from Rep. Mike Carey, follows the introduction of the bill last December, spearheaded by Rep. Carey and Sen. Ted Cruz.

Key Takeaways

• President Trump signed legislation overturning the IRS DeFi reporting rule.
• The repeal reduces regulatory burdens on DeFi participants, fostering innovation while addressing privacy concerns.

This marks a significant development: it's the first cryptocurrency bill ever signed into law and the first tax-related Congressional Review Act of Disapproval (CRA) signed into law. Representative Carey stated the DeFi Broker Rule "needlessly hindered American innovation, infringed on the privacy of everyday Americans, and was set to overwhelm the IRS." The bill, H.J.Res.25, formally invalidates the IRS's "Gross Proceeds Reporting by Brokers" rule, which expanded the definition of "broker" to include non-custodial entities like DeFi platforms. This would have forced DeFi projects to report gross proceeds from crypto sales and collect extensive taxpayer data.

The rule's repeal eliminates the need for DeFi platforms to report gross proceeds of sales on Form-1099, easing compliance burdens. This action directly addresses concerns raised by industry players like the Blockchain Association, who criticized the original rule as impractical and innovation-stifling.

The resolution, which passed the Senate on March 4th and the House the following week, required a final Senate vote before being sent to the President. The Senate's final vote took place on March 26th. Under the Congressional Review Act, a substantially similar rule cannot be enacted by the IRS without further congressional approval.

President Trump's action aligns with his administration's generally deregulatory stance and his stated support for emerging technologies, including cryptocurrencies. The White House publicly supported the resolution, citing negative impacts on innovation and concerns about taxpayer data privacy as reasons for its repeal.

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