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U.S. President Donald Trump has signed into law a resolution repealing a contentious Internal Revenue Service (IRS) rule that would have imposed stringent data reporting requirements on cryptocurrency brokers, The Block reported on Thursday.
The resolution, which overturned a rule finalized during the previous Biden administration, was championed by Republican lawmakers, including Senator Ted Cruz and Representative Mike Carey. The White House had previously characterized the IRS measure as a "midnight regulation," suggesting it was rushed through in the final days of the prior administration.
Representative Carey, who attended the signing ceremony on Thursday, hailed the repeal as the first crypto-related bill to be signed into law: "By repealing this misguided rule, President Trump and Congress have given the IRS an opportunity to return its focus to the duties and obligations it already owes to American taxpayers instead of creating a new series of bureaucratic hurdles."
The now-nullified IRS rule would have mandated "custodial brokers" to collect and report user data to the tax agency. This definition, as clarified by the Treasury Department, extended to "front-end service providers" that directly interact with customers, effectively targeting entities running websites that provide access to decentralized protocols.
Critics of the rule argued that it would have placed an undue burden on the burgeoning decentralized finance (DeFi) sector, requiring participants to operate akin to traditional securities brokers. This would have included collecting and reporting user trading data and issuing Form 1099 tax returns, a move that drew sharp criticism from industry advocates who saw it as stifling innovation.
