Former President Donald Trump made history by signing the first-ever crypto-focused U.S. law, killing a controversial IRS rule that would have forced DeFi protocols to snitch on their users. The Biden-era regulation, set to take effect in 2027, would have required decentralized finance platforms to report transaction details and user information to the IRS. Not anymore.
The repeal sailed through Congress with bipartisan support, using the Congressional Review Act to axe what many viewed as an overreach by tax authorities. White House officials praised the move, claiming it would foster innovation in the crypto space. Talk about a complete 180 from the previous administration’s stance. The development comes as Senate Democrats urge the Department of Justice to revive its crypto enforcement team.
Critics of the original rule didn’t hold back. They argued it would have basically forced DeFi platforms to choose between becoming glorified government informants or packing up and moving overseas. The compliance costs? Astronomical. The privacy implications? Terrifying. And let’s not forget the IRS would’ve been drowning in a sea of paperwork they weren’t even equipped to handle. The rule’s requirements contradicted the fundamental principle of blockchain transparency that already provides a complete transaction record.
But not everyone’s celebrating. Supporters of the defunct rule insist it was necessary to prevent wealthy crypto enthusiasts from dodging taxes. They claimed the reporting requirements would have helped crack down on money laundering and fraud. Some Democratic lawmakers are now wringing their hands about unaddressed tax loopholes.
The impact is clear: DeFi platforms can breathe easier, knowing they won’t have to play tattletale for the IRS. The U.S. crypto industry just scored a major win for decentralization, and tech companies might actually consider staying put instead of fleeing to more crypto-friendly countries.
Sure, there are worried whispers about potential tax evasion risks, but the crypto community is too busy popping champagne to care.
The message from Washington is crystal clear: the government’s attempt to strong-arm DeFi into traditional financial reporting frameworks just got body-slammed. And for better or worse, the crypto wild west lives on.
