Trump Signs Law to Void Expanded IRS Rule for Crypto Brokers

President Donald Trump recently signed a measure overturning a controversial IRS rule that would have expanded the definition of “broker” to include decentralized crypto exchanges.

The rule, which the IRS finalized in late 2024 under the Biden administration, was set to take effect in 2026 and faced strong opposition from the crypto industry. It was introduced as part of efforts to tighten tax reporting requirements for crypto transactions, a move stemming from the 2021 Infrastructure Investment and Jobs Act.

The regulation required crypto brokers, including decentralized finance (DeFi) platforms, to report user transaction data to both the IRS and asset holders, much like traditional financial institutions.

However, DeFi platforms differ from centralized exchanges like Kraken and Coinbase, which act as intermediaries between sellers and buyers. DeFi platforms operate on blockchain technology, allowing users to transact directly without intermediaries. Since these platforms don’t collect user data, they argued that complying with the IRS rule would be impossible.

Critics also claimed the measure would stifle innovation and impose unfair burdens on businesses that facilitate decentralized transactions.

Republicans pushed back against the rule, calling for its repeal via the Congressional Review Act, which allows lawmakers to overturn new federal regulations with a majority vote. Representative Mike Carey led the effort in the House while Senator Ted Cruz championed the measure in the Senate. It passed both chambers in March, with the House voting on March 11 and the Senate following on March 26.

With Trump’s signature, the measure is now law, and the IRS rule is immediately nullified. DeFi platforms and other asset brokers will no longer be required to report gross sales proceeds using Form 1099.

The repeal is seen as a significant victory for the crypto sector, with industry groups, including the Blockchain Association, applauding the decision. Carey also commended the repeal as a win for both technological growth and financial privacy.

Trump’s recent move aligns with his broader pro-crypto stance. On the campaign trail, he pledged to be the “crypto president” and has openly courted support from the sector. He established a crypto-focused working group in January to develop regulatory proposals for the industry. In March, he signed an executive order creating a federal crypto stockpile.

The swift repeal of the IRS rule reflects growing momentum among GOP legislators to limit regulatory intervention in crypto markets. Congress is also considering additional legislation, including measures to establish a stablecoin regulatory framework.

Entities like Bit Digital Inc. (NASDAQ: BTBT) will look at the policy direction so far enacted by the federal administration and look forward to an even better future anchored upon supportive regulations that take into account investor protection while enabling industry innovation.

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