Key Takeaways
- The DeFi broker rule has now been repealed after President Donald Trump signed the bill, making it the first legislation focused on crypto in the United States.
- The rule tried to define DeFi platforms as brokers which would require them to meet rigid tax reporting rules under Biden’s administration.
- Concerns on privacy violations and blockage to innovation were central in supporting the repeal from both sides of the aisle.
- The crypto market positively reacted with prices of Bitcoin and Ethereum rising alongside several major tokens.
Background: The Controversial IRS DeFi Rule
In December of 2024, the Internal Revenue Service (IRS) issued a rule change extending the definition of “broker” to include DeFi platforms. Such a classification would mandate reporting user DeFi transactions and taxpayer information collection akin to traditional financial intermedaries. Criticism was directed at the absence of a center and inability to work with decentralized user data control.
Though this rule was set to take effect in 2027, it faced backlash in the form of the crypto privacy movement. Worries included the undermining of possible innovation, encroachment on personal privacy, and the impossibility of enforcing such rules on decentralized entities.
Legislative Repeal and Presidential Approval
Making use of the Congressional Review Act (CRA), Congressmembers put forth a proposal to erase the DeFi broker rule set in place by the IRS. The proposal was accepted by the Senate and the House with overwhelming bipartisan backing. Trump signed the resolution on law on the 10th of April in the year 2025, effectively removing the rule.
“Had this rule been enforced, it would have chipped away at the United States’ dominance in cryptocurrency,” told the press Senator Ted Cruz, one of the leading advocates for the repeal. “Unraveling that blunder of a rule means President Trump and Congress are able to keep the IRS busy with its actual responsibilities rather than having to funnel red tape into the endless red tape machines.”
Market Reaction: A Bullish Turn
The crypto market reacted positively to the repeal. The price of Bitcoin (BTC) also recorded an increase, trading at 84,870, while Ethereum′s (ETH) price rose to about 84,870, while Ethereum′s (ETH) price rose to about 1,675. Other DeFi tokens such as Uniswap (UNI), Aave (AAVE), and Compound (COMP) also registered an increase.
Analysts view the repeal as a sign that the US may have adopted a softer stance in their regulation of cryptocurrencies which could see greater investment and innovation in the industry.
Timeline of the IRS DeFi Rule and Its Repeal
Related Reading
To learn more about the shifting framework of cryptocurrency regulation, read our article: Public Companies Are Stacking Bitcoin – So Why Is Crypto Crashing?
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.
Mihajlo is a freelance writer and content strategist focused on B2B SaaS and crypto.
Over the past 3+ years, he’s helped some of the largest and most successful startups and ICOs in the industry with their content marketing.
