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US President Donald Trump is expected to sign a resolution that will strike down a Biden-era regulation requiring DeFi protocols to report transactions to the Internal Revenue Service (IRS). The move comes after the Senate voted 70-28 on March 26 to repeal the so-called IRS DeFi broker rule.
The regulation, introduced under the Biden administration, sought to expand existing IRS reporting requirements to DeFi platforms. It would have forced decentralized exchanges (DEXs) and other DeFi protocols to disclose details of crypto sales, including gross proceeds and identifying information on those involved in the transactions.
The Senate’s decision followed the House’s passage of a similar resolution on March 11, which allowed the measure to move forward for Trump’s approval. The White House’s AI and crypto czar, David Sacks, confirmed that Trump supports repealing the rule, signaling the administration’s alignment with the crypto sector on this issue.
Crypto Advocates Celebrate, Critics Raise Concerns
The Senate vote drew praise from crypto advocacy groups, which argued that the regulation would have stifled innovation. Blockchain Association CEO Kristin Smith welcomed the repeal, stating that the group looked forward “to taking this harmful rule off the books for good.”
Eli Cohen, general counsel at Centrifuge—a platform focused on real-world asset tokenization—echoed the sentiment. He called the regulation “unworkable in practice,” emphasizing that it failed to account for the decentralized nature of DeFi, where no single entity controls the protocols.
However, critics argue that the rule’s repeal could create loopholes for tax evasion and illicit financial activities. Democratic Representative Lloyd Doggett, who opposed the measure, also described it as a “special interest exemption” that makes tax evasion and money laundering easier for the wealthy.
Doggett warned that eliminating the rule could provide cover for “tax cheats, drug traffickers, and terrorist financiers.”
Impact on DeFi and Crypto Taxation
If Trump signs the resolution, it will mark a major win for DeFi platforms, which have long argued that traditional financial regulations are ill-suited for their decentralized nature.
Without the rule, DeFi protocols will not be required to file IRS reports, potentially reducing their compliance burden and preserving user privacy. However, the move may also invite scrutiny from regulators seeking alternative methods to monitor crypto transactions.
