Trump Signs First-Ever U.S. Crypto Law, Repeals IRS DeFi Reporting Rule

The overturned rule originated during the final months of the Biden administration and sought to enforce tax reporting obligations on DeFi protocols and crypto wallet providers. Under the rule, these platforms would have been responsible for collecting user information and reporting gross proceeds from digital asset sales to the IRS, much like traditional financial institutions.

Critics from across the political spectrum condemned the measure as both unworkable and damaging to U.S. innovation. Decentralized platforms, they argued, often lack centralized infrastructure or access to personal user data, making compliance virtually impossible. Privacy advocates also voiced strong opposition, warning that the rule could jeopardize the pseudonymous nature of blockchain technology and expose users to new surveillance risks.

The repeal was championed in Congress by Representative Mike Carey (R-Ohio) and Senator Ted Cruz (R-Texas), who jointly introduced the disapproval resolution under the Congressional Review Act. That legislation enables lawmakers to nullify recently enacted federal rules and prevent agencies from issuing similar regulations in the future without new legislative approval.

Senator Cruz criticized the rule for threatening the U.S. crypto ecosystem, arguing that it would have placed unreasonable compliance burdens on software developers and decentralized protocols unable to meet the IRS's data collection demands. He welcomed its repeal as a positive step for American innovation and economic freedom.

The resolution passed with rare bipartisan support, clearing the Senate with a 70–28 vote and the House by 292–132, underscoring a growing recognition in Washington of the economic potential and technological promise of decentralized finance.

The crypto industry widely applauded President Trump’s decision. Kristin Smith, CEO of the Blockchain Association, had called the IRS rule a sledgehammer to the engine of American innovation, and said its repeal is "a clear message that America remains the world capital for crypto innovation".

Beyond the symbolism of overturning the IRS rule, the legislation represents a concrete step toward regulatory clarity in the U.S. digital asset space, long a source of frustration for both crypto entrepreneurs and investors. Industry leaders have repeatedly criticized the lack of well-defined rules as stifling innovation and pushing businesses offshore.

President Trump’s administration has signaled a markedly pro-crypto posture in 2025, reversing several restrictive policies from prior years. In addition to signing this repeal, Trump has established a federal working group on cryptocurrency regulation, expressed support for expanding U.S.-based crypto mining, and established a national Bitcoin reserve, a move aimed at cementing America’s role in the future of decentralized finance.

The IRS has not yet commented on the repeal, though observers expect the agency will need to revisit its approach to crypto tax compliance in light of the new legal landscape. Without the broker rule, regulators will need to explore alternative frameworks for gathering tax data from decentralized platforms, potentially involving direct user reporting or new congressional legislation.

As global competition in digital finance intensifies, many see the repeal of the DeFi broker rule as a turning point in the United States’ evolving relationship with blockchain technology. With Trump’s signature now sealing the measure into law, the path ahead could lead to a more open, innovation-friendly regulatory environment, one that acknowledges the unique structure and potential of decentralized financial systems.