IRS Crypto Rule Reversed by Trump – The First Crypto Policy Under The New Administration
Industry News
One of the main things the new US administration advocated for is supporting the crypto space, DeFi participants, and digital asset businesses, including exchanges, brokerages, and investors.
After significant lobbying from the Ohio and Texas Senates, President Trump removed the IRS Crypto Rule, a policy introduced by Biden in the last days of his term. This announcement was a relief for many crypto exchanges, digital asset brokerage firms, and DeFi users.
Let’s explain the impact of this decision and the future outlook.
Trump Annuls IRS Crypto Rule: What Happened?
On Friday, April 11th, President Donald Trump approved repealing the controversial IRS crypto reporting mandate, which was signed by Biden. The rule had long bothered digital asset advocates and crypto communities.
The announcement followed a wave of bipartisan resistance in Congress, with critics considering it dangerously vague and impractical. By annulling it, Trump has effectively breathed life into the crypto space, benefiting DeFi platforms, brokers, and innovators who struggled with compliance.
Moreover, this decision marks Trump’s first major crypto move since returning to office. It would also spur more developments in blockchain and boost investor confidence.
Background and Story Development
The now-defunct IRS crypto rule was the basis for cracking down on the digital asset world. Its term, “brokers” of crypto, was very indefinite, causing major confusion and disagreement in the industry.
It included not only centralised exchanges but potentially DeFi platforms, validators, developers, and even wallet creators. The rule required them to report detailed user data to the US Internal Revenue Service. However, Many of these actors do not actively collect that kind of information, due to the notion of the decentralised economy.
Critics warned that it posed an existential threat to blockchain innovation, with some platforms considering exiting the US market entirely. Developers also feared being penalised for participating in DeFi infrastructure development due to non-compliance.
On the other side, the pushback was fierce from Senators Cynthia Lummis and Ron Wyden, who argued that the rule blurred the lines between regulatory oversight and technological censorship.
The actual repeal was then driven by a joint resolution led by Senator Ted Cruz and Republican Representative Mike Carey. They used the Congressional Review Act to formally start nullifying the rule, calling it “destructive” to American innovation and economic competitiveness.
After Congress approved the resolution, it landed on President Trump’s desk, who signed it on April 11th, officially wiping the rule off and reshaping the future of the IRS crypto rules.
What Was Biden’s IRS Crypto Policy?
The IRS rule born under the Biden administration aimed to get crypto brokers to report user transactions similarly to traditional stock brokers. However, implementing the policy was troublesome. It defined “broker” so broadly that it swept anyone remotely connected to crypto transactions, regardless of their actual deliverables or functions.
The reporting required DeFi entities to provide Form 1099-DA, which was meant to help the IRS keep tabs on capital gains and collect crypto taxes.
Platforms with no KYC systems, no user databases, and no backend control suddenly faced legal crackdowns on multiple grounds. Legal analysts and blockchain innovators criticised the rule.
However, the SEC’s ex-chairman supported this approach, resulting in multiple lawsuits against leading platforms like Coinbase, Binance, and Kraken.
Implications on The Crypto Market
The IRS crypto news update instantly shifted sentiment across the crypto landscape. Bitcoin and Ethereum edged slightly upward.
DeFi builders, wallet providers, and exchanges saw this update as a green light to resume projects put on hold and plan re-entry into the US. Nevertheless, some warn that the tax gap will widen in the absence of any replacement strategy, necessitating a quick governing regulation.
Final Remarks
Trump’s move to strike down the IRS crypto rule is receiving massive applause from the blockchain community. After months of being victimised by the SEC under the previous administration, crypto brokers can now resume their activities under pure decentralisation.
This announcement marks the first Bitcoin-friendly decision to pass the President, Congress, and Senate, hinting at a brighter crypto future in the United States.
Disclaimer: This article is for informational purposes only. It is not financial advice and should not be relied upon for investment decisions. Always do your own research and consult a financial advisor before investing.
