President Donald Trump has signed a historic bipartisan crypto bill into law, repealing the ridiculous DeFi Broker Rule. The IRS implemented this rule within the Biden administration. Finalized at the end of 2024, it would have created unprecedented regulatory burdens on the decentralized finance (DeFi) sector. This particular bill is the fourth consecutive attempt to have robustly bipartisan support on the House and Senate. This backing constitutes a huge win for the crypto sphere.
To do this, they implemented the repeal through the Congressional Review Act (CRA). This potent mechanism not only overturns the rule, but prevents future administrations from reintroducing the same regulations without direct approval from Congressional delegation. This would be the first crypto legislation to pass under the CRA.
Impact of the DeFi Broker Rule
The DeFi Broker Rule mandated that self-custodial wallet providers and developers of decentralized protocols submit detailed transaction reports to the IRS, similar to traditional financial brokers. This would have inflated DeFi’s tax burden and uncertainty by requiring a swath of decentralized finance platforms to collect and report taxpayer information. Lawmakers from both sides of the aisle expressed in no uncertain terms concerns about the technological impracticality of regulating DeFi systems in that manner.
The rule’s implementation would have had broad consequences, including the possibility of chilling Web3 innovation here in the United States. The expansive nature of the rule made it an affront to privacy and innovation in the fast-moving world of DeFi.
Bipartisan Support and Legislative Action
This bipartisan bill to repeal the DeFi Broker Rule passed with overwhelming bipartisan support. That’s an encouraging sign of growing awareness of the need to foster innovation in the digital asset space while upholding vital regulations. Lawmakers understood the ability of the rule to push innovation and businesses abroad.
"The DeFi Broker Rule needlessly hindered American innovation, infringed on the privacy of everyday Americans, and was set to overwhelm the IRS," - Rep. Mike Carey (R-Ohio)
The CRA, as it is called, is a powerful tool that lets Congress swiftly strike down rules. This prevents future administrations from implementing parallel actions without requiring additional consultation with Congress. This decision further demonstrates a dedication to delivering regulatory certainty and predictability for the crypto sector.
Implications for the DeFi Sector
The repeal of the DeFi Broker Rule is largely viewed as a critical win for the decentralized finance community. The new law gets rid of costly and excessive reporting requirements. This amendment provides more clarity to promote innovation and investment in DeFi here in the United States. The move is likely to encourage a more positive regulatory approach toward blockchain technology and digital assets.
This all makes today’s move something remarkable. It seeks to do so by safeguarding consumers and stopping illicit conduct without stifling technological progress. The repeal may provide opportunities for new legislation. This would go a long way to providing much-needed regulatory clarity for the burgeoning cryptocurrency and blockchain-based application industries.
