President Donald Trump signed a bill on Thursday that overturns a revised IRS rule that expanded the definition of a broker to include decentralized cryptocurrency exchanges, according to a White House statement.
In the final weeks of the Biden administration in December, the IRS updated its crypto tax reporting rules, which were finalized in early 2024, to clarify that its new guidelines also apply to decentralized finance (DeFi) exchanges.
In March, both the House and Senate voted to reject the revision through the Congressional Review Act, which allows Congress to overturn new federal regulations with a simple majority vote.
The cryptocurrency industry slammed the revised rule, claiming that it does not apply to DeFi platforms and called on Republicans to revoke it.
Centralized exchanges such as Coinbase and Kraken act as intermediaries between buyers and sellers, while DeFi exchanges aim to eliminate middlemen and allow users to trade directly on the blockchain network that supports cryptocurrencies.
Crypto industry participants believe that because DeFi exchanges do not act as intermediaries, they have no way of knowing who their users are and thus cannot comply with IRS rules.
The new framework finalized by the IRS last year is designed to crack down on cryptocurrency users who may not have paid taxes. The framework stems from the bipartisan $1 trillion Infrastructure Investment and Jobs Act of 2021. The framework requires digital asset brokers to submit forms to the IRS and digital asset holders to assist them with tax reporting.
Trump promised to become a “crypto president” during his campaign and promised to promote the adoption of digital assets to attract funds to the industry.
In his first week in office, Trump ordered the establishment of a cryptocurrency task force to propose new digital asset regulations and signed an executive order in March to establish a federal Bitcoin reserve.
