In support of cryptocurrency advocates regarding tax reporting limits, President Trump reverses an IRS regulation that applied broker rules to DeFi exchanges.

According to a White House statement, U.S. President Donald Trump signed a measure into law on Thursday that would repeal an Internal Revenue Service rule that had been amended to include decentralized bitcoin exchanges in the definition of a broker. The IRS revised its crypto tax reporting regulation, which it had completed earlier in 2024, in the closing weeks of the Biden administration in December to make it clear that the new rules would also apply to decentralized finance, or DeFi, exchanges.

In March, the Congressional Review Act, which gives Congress the power to overturn new federal regulations with a simple majority, was used by both the Senate and the House of Representatives to vote against the change.

Criticizing the updated rule as unfeasible for DeFi platforms, the bitcoin sector urged Republicans to repeal it. While DeFi exchanges seek to eliminate the middleman and enable users to interact directly on a blockchain network, which underpins cryptocurrencies, centralized exchanges like Coinbase and Kraken serve as a mediator between buyers and sellers. Participants in the cryptocurrency sector contended that DeFi exchanges cannot comply with IRS regulations as they do not serve as middlemen and thus do not have access to user information.

The new IRS approach, which was approved last year and was a result of the $1 trillion bipartisan 2021 Infrastructure Investment and Jobs Act, was designed to crack down on cryptocurrency users who could be noncompliant with their taxes. In order to help digital asset holders prepare their taxes, digital asset brokers have to transmit the paperwork to the IRS as well.

During his campaign, Trump promised to be a crypto president and courted industry money by saying he would encourage the use of digital assets. Trump signed an executive order in March to establish a federal bitcoin stockpile and, in his first week in office, directed the formation of a working group on cryptocurrencies to develop new regulations for digital assets.