Update April 11, 1:46 am: This article has been updated to include more information and background on the resolution.
Trump Overturns IRS DeFi Reporting Rule
US President Donald Trump has taken a significant step in the realm of cryptocurrency regulation by signing a joint congressional resolution that overturns a rule initially introduced during the Biden administration. This rule mandated decentralized finance (DeFi) protocols to report transactions to the Internal Revenue Service (IRS).
Scheduled to be enacted in 2027, the IRS DeFi broker rule aimed to broaden the IRS’s existing reporting requirements. It would have obligated DeFi platforms to disclose gross proceeds from crypto sales, including taxpayer information linked to those transactions.
By signing off on the resolution on April 10, Trump effectively annulled the measure, making history as the first crypto-related bill signed into law. Representative Mike Carey, a proponent of the bill, highlighted this landmark moment in a statement.
“The DeFi Broker Rule needlessly hindered American innovation, infringed on the privacy of everyday Americans, and was set to overwhelm the IRS with an overflow of new filings that it doesn’t have the infrastructure to handle during tax season,” he said.
Source: Mike Carey
Debate Surrounding the IRS Rule
The proposed rule faced criticism for imposing stringent regulations on decentralized platforms, potentially stifling innovation in the crypto and DeFi sectors. Conversely, supporters of the rule, such as Democratic Representative Lloyd Doggett, argued that repealing it would open a loophole that could be exploited by affluent tax evaders.
The resolution progressed swiftly through Congress, passing out of the House Ways and Means Committee on February 25, followed by approval from the House on March 11. The Senate subsequently passed the resolution on March 26, after reconciling its version with the House due to constitutional stipulations regarding budget measures.
Given the administration’s stance, Trump’s endorsement of the bill was anticipated. In March, White House AI and crypto czar David Sacks had indicated the President’s support for nullifying the measure.
IRS Rule Repeal: A Relief for the Crypto Industry
Kristin Smith, CEO of the Blockchain Association, expressed relief in an April 10 statement, noting that the “industry’s innovators, builders, and developers can breathe again” following the resolution’s passage.
“This rule promised an end to the United States crypto industry; it was a sledgehammer to the engine of American innovation,” she added.
Kristin Smith claimed the IRS rule would have destroyed the US crypto industry. Source: Blockchain Association
Related: OpenSea urges SEC to exclude NFT marketplaces from regulator’s remit
Legal Challenges and the Trump Administration’s Crypto Policy
In December, a lobby group filed a lawsuit against the IRS, the Treasury, and then-Treasury Secretary Janet Yellen, arguing the IRS rule was unlawful and represented an “unconstitutional overreach.”
The Trump administration has generally adopted a favorable approach toward crypto, moving to moderate the Securities and Exchange Commission’s (SEC) previously stringent stance on the industry, which was established under former Chair Gary Gensler. The regulator has since dismissed several enforcement actions and investigations against crypto firms initiated during the Biden administration, and has commenced industry consultations to better understand the regulatory landscape.
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For more details, visit the source: Cointelegraph
