With President Donald Trump’s signature, the decentralized finance (DeFi) sector in the cryptocurrency domain is now exempt from the U.S. Internal Revenue Service’s requirements that classified such platforms as brokers, thereby compelling them to monitor and report user activities.
This narrowly defined IRS regulation, which was greenlit in the waning days of former President Joe Biden’s term, has now been formally repealed, as stated by Ohio Republican Representative Mike Carey, who supported the initiative. Additionally, the IRS has been barred from implementing similar measures in the future under the Congressional Review Act, which was utilized by lawmakers to eliminate the tax rule.
While the matter may have seemed relatively minor, its resolution signifies a landmark achievement as it represents the first successful pro-crypto initiative to pass through the U.S. Congress.
Both the Senate and House showcased strong bipartisan support in overturning the IRS decision, further emphasizing the growing influence of the crypto sector in this legislative session. This momentum could be promising for the industry concerning other broader legislative efforts, including the regulation of stablecoin issuers and the establishment of market rules for cryptocurrency transactions.
With Trump’s endorsement of the DeFi tax resolution, concerns surrounding DeFi regulations appear to be resolved for now. The focus in Congress has shifted to stablecoin legislation, with similar bills having progressed through the relevant committees in both chambers and on the verge of floor votes. If approved, this would initiate a process to amalgamate the two initiatives into a single compromise measure.
The president has expressed a desire for the bill to reach his desk by August, and the legislators involved have indicated that this timeline remains achievable.