President Donald Trump has become the first US president to sign a formal cryptocurrency bill into law, overturning an IRS rule introduced by the previous President Joe Biden administration.
The repealed IRS regulation, which was due to take effect in 2026, would have required decentralised finance (DeFi) platforms to report users’ tax information in the same way as traditional financial brokers.
The rule faced heavy criticism from digital asset platforms, which argued that it represented yet another “one-size-fits-all” approach to regulation that would stifle adoption of digital assets.
Additionally, industry voices also stated that DeFi platforms, being fully automated and operating on secure blockchain networks, are not equipped to collect users’ tax information.
After receiving clearance from both the Senate and House, in which the Republicans hold a majority in both, this latest Trump repeal may set the foundations in motion for further crypto-related legislation to pass into law.
Vugar Usi Zade, COO at Bitget, told Payment Expert that the repeal of this rule “comes as a big boost for the crypto industry”. He added: “It will increase participation from retail users on digital asset platforms. We can expect rapid adoption of digital assets as an asset class.”
Trump’s crypto vision unfolds
When President Trump entered the White House for his second term, he declared his ambition to make the US the “crypto capital of the world.” The president believes the decentralised sector holds significant potential and has pledged to remove any barriers to its growth, including measures like this.
In contrast, the Biden administration adopted a much more cautious stance on crypto, with this being one of the final bills passed during his tenure. So far, much of Trump’s early work has focused on dismantling the policies of his predecessor. Earlier this week, the Department of Justice dissolved its National Cryptocurrency Enforcement Team.
Anish Jain, Founder and CEO of WChain, a Singapore-based Web3 firm, stated: “This decision shows a clear understanding of the unique nature of DeFi platforms and their potential for driving innovation in the financial sector.
“By repealing the IRS rule on DeFi, we’re preserving the core principles of decentralisation and privacy that are fundamental to blockchain technology. This move will undoubtedly foster a more conducive environment for technological advancement and economic growth in the digital asset space.”
Digital asset firms working under the same regulations as their traditional counterparts is a common gripe many within the sector have been calling for to either avoid or scrap entirely in favour of crypto-focused laws.
This sentiment was also shared across the Atlantic in the UK as Su Carpenter, Director of Operations at CryptoUK, a digital asset lobbyist organisation, told Payment Expert in 2023 in detail why policymakers need to understand the nuances of blockchain and the digital assets sector before undergoing legislation proposals to regulate the sector.
Jain explained to Payment Expert that he is excited about the impact the decision in the US will have on the wider crypto ecosystem, a stance also shared by Zade.
“We strongly believe that this law will create a strong foundation for a healthy regulatory framework for virtual assets in the world’s largest economy,” Zade concluded.
“The clarity around regulations for stablecoin payments and strategic bitcoin reserves will play a pivotal role in transforming the digital asset industry globally.”
As mentioned previously, this law repeal may see the acceleration of various crypto and stablecoin draft proposals pass into law. In the US, lawmakers have been going back and forth over the stablecoin bill, which was repeatedly redrafted and turned away under the Senate’s Democratic leadership.
Now with the Trump Administration controlling both the House and Senate, his crypto ambitions may take one step closer.
