President Donald Trump has finalized the cancellation of a proposed rule that would have obliged decentralized finance (DeFi) platforms to submit user transaction records to the IRS. The rule, which was first proposed under the Biden administration, was set to go into effect in 2027.
The goal of the rule was to regulate DeFi platforms as brokerages, including requiring them to report crypto sales and taxpayer information to the tax agency.
On April 10, Trump approved a joint resolution cancelling the rule, a process that has not resulted in any crypto-focused bill becoming law thus far. One of the supporters of the bill, Representative Mike Carey stated that the rule would overwhelm the IRS with data it would be unable to cope with, whilst harming user privacy and innovation.
Advocates of the prior rule said it needed to close loopholes that allowed wealthy investors to get out of paying taxes. However, critics said decentralized platforms could never come into compliance and that it would cripple the U.S. crypto industry.
This was an expected decision, especially after Trump’s crypto advisor David Sacks confirmed President Trump’s desire to repeal the measure back in Mar 4. This resolution moved through Congress, clearing the House on Mar 11 and the Senate 15 days later.
The move was applauded by leaders in the crypto industry. Kristin Smith, CEO of the Blockchain Association, said the sector can “breathe again” after the rule was described as a “death by a thousand cuts” for innovation and privacy.
In December, her group also filed a suit against the IRS, however that one was against the Treasury Department for the same rule, claiming it was unconstitutional.
Upon leaving office, Trump had adopted a relatively friendly stance towards crypto. His administration has eased up the SEC position, the SEC has dropped a number of action cases on crypto and initiated new dialogues on fair regulation.
