Donald Trump sent shockwaves through the crypto world by signing legislation that kills a controversial IRS reporting rule for DeFi platforms. The repealed regulation, birthed during Biden’s administration as part of the 2021 Infrastructure Investment and Jobs Act, would have forced decentralized finance platforms to play tattletale with user data to the IRS. Not anymore. The rule was originally set for 2027 before its cancellation.
The move marks the first crypto-specific bill ever signed by a U.S. President, and boy, did it make waves. Bitcoin promptly shot past $80,000, while DeFi developers collectively breathed a sigh of relief. The original rule was about as practical as teaching a cat to swim – it demanded that decentralized platforms, which by definition lack central control, somehow collect and report user information.
Republican lawmakers Ted Cruz and Mike Carey championed the repeal through Congress using the Congressional Review Act. They managed to wrangle bipartisan support in both chambers, though Democrats weren’t exactly thrilled. Their main gripe? The whole tax evasion thing. But supporters argued the rule was crushing innovation and trampling privacy rights. Senate Democrats are now pushing for the DOJ to reinstate its crypto team to fight financial crime.
The crypto community is practically doing backflips over this one. Industry leaders had been pulling their hair out over how to comply with a regulation that basically asked decentralized exchanges to act like centralized ones. It’s like asking a cloud to sit still – it just doesn’t work that way. The move could boost adoption of stablecoin transfers which already process over $2.5 trillion in cross-border payments annually.
While crypto enthusiasts celebrate, critics are sounding alarm bells about potential gaps in tax enforcement. The U.S. is now officially trailing behind the EU and OECD in crypto tax compliance measures. But supporters argue that’s a small price to pay for protecting innovation and privacy in the growing DeFi sector.
The repeal could turn the U.S. into a more attractive playground for crypto developers and projects. Meanwhile, the focus shifts to other pending crypto regulations in Congress. One thing’s clear: this move just redrew the battle lines in America’s ongoing crypto regulatory saga.
