According to a White House statement, US President Donald Trump signed legislation on Thursday to repeal a revised Internal Revenue Service rule that broadened the definition of a broker to include decentralized bitcoin exchanges.
In the closing weeks of the Biden administration in December, the IRS revised its crypto tax reporting regulation, which had been finalized earlier in 2024, to clear that the new requirements would also apply to decentralized finance, or DeFi, exchanges.
In March, the Senate and the House of Representatives both voted to repeal the revision using the Congressional Review Act, which gives Congress the power to overturn new federal regulations with a simple majority.
The industry for cryptocurrencies had criticized the updated legislation, saying it was not feasible for DeFi platforms, and urged lawmakers to repeal it.
While centralized exchanges like Coinbase and Kraken serve as a mediator between buyers and sellers, DeFi exchanges want to eliminate the middleman and enable users to conduct transactions directly on the blockchain network that underpins cryptocurrencies.
According to players in the cryptocurrency business, DeFi exchanges cannot comply with IRS regulations as they do not serve as intermediaries and so do not have access to user information.
The new IRS structure, which was established last year and was a result of the $1 trillion bipartisan 2021 Infrastructure Investment and Jobs Act, was designed to crack down on cryptocurrency users who might be noncompliant with their taxes. It required digital asset brokers to deliver the paperwork to both the IRS and digital asset holders to help them with their tax returns.
During his campaign, Trump promised to be a “crypto president” and courted industry funding by pledging to encourage the use of digital assets.
During his first week in office, Trump signed an executive order in March to establish a federal bitcoin stockpile and directed the formation of a working group on cryptocurrencies to develop new rules for digital assets.
