The U.S. Treasury Department has taken a key step in supporting the decentralized finance (DeFi) sector by officially repealing a controversial rule that would have required DeFi platforms to report all user transactions to the IRS.


Controversial Rule Overturned After Congressional Action

The rule, introduced in late 2024 and originally set to take effect in 2027, aimed to treat DeFi protocols like traditional brokers—mandating the reporting of detailed transaction data, including user identities.

However, it faced strong backlash. Developers, privacy advocates, and the crypto community pointed out that most DeFi protocols do not store personal information and cannot comply with such requirements—effectively making it impossible for many platforms to operate.

In response to mounting pressure, Congress voted to repeal the rule in 2025, and President Donald Trump signed the repeal into law. Now, the U.S. Treasury has formally confirmed that the rule has been officially withdrawn.


DeFi Wins Relief, but Centralized Exchanges Still Under IRS Scrutiny

While DeFi projects are celebrating a regulatory victory, centralized exchanges remain subject to strict IRS reporting rules. This was made evident in the well-known Coinbase case.

The U.S. Supreme Court refused to revisit a 1976 ruling stating that records held by third parties—like banks or crypto exchanges—are not protected by constitutional privacy rights. Based on that precedent, the IRS forced Coinbase to hand over data on more than 14,000 users.


Trump Administration Moves to Ease Tax Burdens on Crypto

This repeal is part of a broader push by the current administration to create fairer digital asset regulations. Senator Cynthia Lummis recently introduced legislation aiming to eliminate double taxation on crypto activities such as mining, staking, and lending.

The U.S. government is not only stepping back from overregulation but is also actively working to make the country a hub for blockchain innovation.


Summary:

The repeal of the broker reporting rule for DeFi is seen as a major win for the decentralized sector. It also signals a shift in U.S. policy toward more nuanced regulation—distinguishing between centralized and decentralized platforms, which could reshape the industry in the years to come.




#defi , #crypto , #Regulation , #bitcoin , #TRUMP

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