The rule aimed to curb tax evasion on cryptocurrency transactions.
In March, the US Senate passed a resolution calling for the repeal of the rule
Photo Credit: Unsplash/ Alexander Grey
The Internal Revenue Service (IRS) will no longer require certain crypto platforms to report transaction data under President Donald Trump's administration. In a major policy reversal, Trump has signed an executive order nullifying a rule that would have compelled decentralised exchanges to report their customers' total digital asset sales to the IRS. Officially titled “Gross Proceeds Reporting by Brokers that Regularly Provide Services Effectuating Digital Asset Sales,” the legislation is more commonly known as the “DeFi Broker Rule.”
The rule was introduced during the final months of former President Joe Biden's term and was scheduled to take effect in 2026. It was designed to combat tax evasion by improving oversight of cryptocurrency trading activity.
In the last few months, the rule garnered criticism from crypto advocates, who reportedly argued that because decentralised exchanges are automated software applications and not real “brokers”, they could not comply with the rule.
US Representative Mike Carey from Ohio, who was part of the signing ceremony for this order, highlighted that this is the first cryptocurrency bill that has been signed into law, making Trump the first US President to have done so.
“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,” Carey said in his statement. He added that the IRS can now focus on the “duties and obligations it already owes to American taxpayers instead of creating a new series of bureaucratic hurdles.”
The now cancelled rule could have fetched the US Treasury up to $4 billion (roughly Rs. 4,64,852 crore), as per a CNN report.
In March, the US Senate had passed a resolution that suggested the overturning of this rule. In a statement issued on March 4, the Senate said that the rule inappropriately required certain DeFi participants to report gross proceeds from sales of crypto assets and submit data about the taxpayers involved.
“This rule would stifle American innovation and raise privacy concerns over the sharing of taxpayers' personal information, while imposing an unprecedented compliance burden on American DeFi companies,” the Senate had said at the time.
Trump Embraces Crypto
Donald Trump has signed multiple pro-crypto orders since returning to the White House for his second Presidential term. He created a Crypto Task Force under the SEC to expedite the work on drafting crypto rules and also signed an executive order to create a Bitcoin reserve as well as a crypto stockpile.
SEC cases against multiple crypto firms like Binance, Ripple, and OpenSea among others have been dropped in recent weeks, bringing relief to the sector.
As part of his presidential campaign, Trump pledged to transform the US into the world's “crypto capital.”
Earlier this week, the US DoJ disbanded the National Cryptocurrency Enforcement Team (NCET) -- that was also established by Biden to probe crypto businesses in the US.
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