On April 11, 2025, the U.S. cryptocurrency industry ushered in an unprecedented transformation. President Trump officially signed a landmark bill, announcing the repeal of the IRS's 'broker rule' targeting decentralized finance (DeFi) platforms. This is the first cryptocurrency bill in U.S. history to be signed into law by a president, marking a significant shift in the government's attitude towards blockchain technology and decentralized finance. During the signing ceremony, Trump stated that this rule 'hindered innovation in America' and 'violated the privacy of ordinary Americans,' and the passage of the new bill would inject new vitality into the cryptocurrency industry.
I. Background of the Bill: Why did the IRS's DeFi broker rule cause controversy?
In 2024, the IRS issued a controversial rule classifying DeFi platforms as 'brokers' and requiring them to submit 1099 tax forms for users like traditional financial institutions. The intention behind this rule was to strengthen tax oversight of cryptocurrency transactions, ensuring taxpayers accurately report their income. However, practitioners and supporters of the DeFi industry quickly raised strong objections, arguing that this regulation completely ignores the essence of decentralized finance.
Controversy Focus:
1. Technical infeasibility: The core feature of DeFi platforms is decentralization, with many protocols operating automatically via smart contracts, lacking a centralized operational entity. Requiring these platforms to collect user information and submit tax forms is virtually impossible from a technical standpoint.
2. Privacy infringement: One of the attractions of cryptocurrencies is their privacy, whereas the IRS's rule mandating DeFi platforms to collect user data is seen as excessive interference with personal privacy.
3. Stifling innovation: Many startups and developers worry that excessive regulatory burdens will force innovative projects to relocate to countries with more lenient regulations, resulting in a decline in the U.S. competitiveness in the blockchain field.
Trump had previously criticized this rule multiple times during his campaign, stating that it 'contradicted the spirit of freedom in America,' and promised that, once elected, he would promote reforms. Now, this promise has finally been fulfilled.
II. Core Content and Impact of the Bill
The signed bill is called the (Crypto Freedom and Innovation Act), and its main content includes:
1. Officially repeals the IRS's DeFi broker rule, clarifying that DeFi platforms are not classified as traditional financial brokers and are not required to fulfill 1099 reporting obligations.
2. Establishing a new regulatory framework, requiring the Treasury Department to collaborate with industry leaders to develop tax and compliance standards better suited to DeFi characteristics, avoiding a 'one-size-fits-all' regulation.
3. Encouraging innovation and competition, the bill proposes the establishment of a special fund to support blockchain technology research and development, ensuring the U.S. maintains a leading position in the Web3 era.
Industry Reaction:
· DeFi platforms rejoiced: Leading DeFi protocols including Uniswap, Aave, and Compound issued statements praising the decision as a 'victory for decentralized finance.'
· The cryptocurrency market responded positively: Following the announcement, Bitcoin (BTC) and Ethereum (ETH) saw a short-term price increase of over 5%, with DeFi-related tokens (such as UNI, AAVE) experiencing even more significant gains.
· Traditional financial sector attitudes are polarized: Some Wall Street figures worry that loosening regulations may exacerbate money laundering and tax evasion issues, but more believe that clear regulations will actually aid the healthy development of the industry.
III. Trump's Cryptocurrency Policy: Dual Considerations of Politics and Economics
Trump's signing of the bill is not a coincidence. In recent years, cryptocurrency has become an important issue in the political game in the U.S.:
1. Engaging young voters: The millennial and Gen Z generations have a very high acceptance of cryptocurrencies, and Trump's move is seen as an effort to gain support from this group.
2. Countering China's rise in the blockchain sector: China has made rapid progress in central bank digital currency (CBDC) and blockchain technology applications in recent years, and the U.S. needs to loosen regulations to maintain competitiveness.
3. Fulfilling the promise of 'reducing government intervention': Trump has consistently advocated for a 'small government' philosophy, and repealing the IRS's DeFi rule aligns with his core principle of reducing bureaucracy.
Notably, Trump himself has often expressed interest in cryptocurrencies. During the 2024 campaign, he announced that he would accept Bitcoin donations and stated that 'cryptocurrency is the trend of the future.'
IV. Future Outlook: Opportunities and Challenges for DeFi
Although the new bill removes a significant obstacle for the DeFi industry, the road ahead is still fraught with challenges:
1. Global regulatory coordination issues: The U.S. policy shift may inspire other countries to follow suit or retaliate, and how to align with the international regulatory framework remains uncertain.
2. The necessity of industry self-discipline: If DeFi platforms wish to avoid stricter regulations, they must proactively establish anti-money laundering (AML) and user protection mechanisms.
3. Boundaries of technological innovation: With regulatory loosening, DeFi projects are poised for explosive growth, but this may also foster fraud and bubbles, so the industry must be wary of the risks of 'wild growth.'
The bill signed by Trump represents not only a turning point for the U.S. cryptocurrency industry but could also become a key milestone in the global DeFi development history. In the collision of technology and policy, decentralized finance is entering its 'era of freedom.' However, freedom does not mean disorder; finding a balance between innovation and compliance will be a core issue for the industry in the coming years.
