Trump Repeals IRS DeFi Broker Rule, Marking End of Crypto Regulatory Saga
The controversial IRS DeFi broker rule, introduced via the Infrastructure Investment and Jobs Act of 2021, has been repealed with President Trump’s signing of Joint Resolution 25 into law. This rule had expanded the term ’broker’ to include decentralized finance entities, provoking backlash from industry stakeholders like the Blockchain Association and the DeFi Education Fund. They argued it posed a threat to the U.S.’s digital currency leadership. Initiatives led by Rep. Mike Carey and Sen. Ted Cruz, garnering bipartisan support, successfully overturned this rule, thus prompting related lawsuits to be dismissed. This marks the close of a significant chapter in crypto regulation, concluding a 3-year legislative struggle. Notably, Kristin Smith, a staunch opponent of the rule and CEO of the Blockchain Association, will depart to head the Solana Policy Institute, signaling a shift in advocacy leadership.
Bullish
The removal of the IRS rule alleviates regulatory pressure on the DeFi sector, potentially attracting more innovation and participants into the market. This reduction in compliance burdens can be seen as a positive development, enhancing the U.S.’s appeal as a hub for crypto activities. In the short-term, this is likely to boost investor confidence, fueling market growth. Long-term, the streamlined regulatory environment could lead to sustained investment and expansion in the DeFi space, potentially facilitating higher trading volumes and liquidity across platforms.