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In a significant shift for cryptocurrency regulation, President Donald Trump has signed into law a bill that repeals the IRS’s DeFi broker reporting rule, effectively reversing a key provision of the Biden administration’s crypto policy framework.
The rule, originally part of the 2021 Infrastructure Investment and Jobs Act, required certain participants in decentralized finance (DeFi) protocols and digital asset services to report user transaction data to the IRS—similar to traditional brokerage firms. Critics argued the rule was unworkable and overly broad, threatening innovation while failing to account for the decentralized nature of blockchain systems.
Repeal Marks Major Win for Crypto Advocates
The repeal bill, formally titled the “Digital Freedom and Innovation Act,” was backed by a coalition of Republican lawmakers and some moderate Democrats. Industry groups including the Blockchain Association and Coin Center had lobbied heavily for its passage, arguing that the original IRS rule would have stifled DeFi innovation and imposed compliance burdens on developers, miners, and node operators who lack access to user data.
“This is a step in the right direction for smart, innovation-friendly regulation,” said a spokesperson for Coin Center. “The original rule attempted to force the decentralized into a centralized mold.”
Policy Reversal Highlights Crypto’s Political Evolution
The rollback of the IRS broker mandate underscores the growing political divide over digital asset regulation. The Biden administration had defended the rule as a necessary measure to close tax loopholes and increase oversight of a fast-growing sector. However, critics said it reflected a misunderstanding of how DeFi protocols operate.
President Trump’s signing of the repeal signals a broader shift in how his administration may handle emerging technologies, particularly as crypto policy becomes a campaign flashpoint ahead of the 2026 midterm elections.
“We’re not going to crush innovation in this country with outdated tax rules,” Trump said during a brief press conference at the signing.
What the Repeal Means in Practice
With the law now enacted, the IRS will no longer pursue enforcement of the DeFi broker reporting rule. However, this does not eliminate tax obligations on digital asset gains. Individuals and institutions are still required to report cryptocurrency income and comply with existing tax laws.
What it does change is who has to collect and submit that information. By removing DeFi developers and non-custodial platforms from the reporting chain, the repeal brings temporary relief to large swaths of the crypto ecosystem that feared legal exposure under the prior interpretation.
Industry Reaction and Next Steps
The crypto industry has widely welcomed the move, but experts caution that regulatory uncertainty remains. While the rollback addresses one controversial rule, broader frameworks for crypto taxation, consumer protection, and financial oversight are still under debate in Congress and among federal agencies.
“This win shouldn’t be confused with regulatory clarity,” said Sheila Warren, CEO of the Crypto Council for Innovation. “What we need next is a forward-thinking, comprehensive approach to digital assets.”
The repeal of the IRS DeFi broker rule marks a major moment in U.S. crypto policy, reflecting a broader realignment under the Trump administration. While it removes a contentious reporting requirement, the path forward for DeFi regulation remains complex and politically charged.
