Trump Targets IRS DeFi Rule — 70 Senators Back Repeal as Sacks, Smith, and Doggett Speak Out

The IRS DeFi broker rule, introduced during the Biden administration, was once designed to extend IRS tax reporting essential to DeFi platforms, consisting of decentralised exchanges (DEXs). This meant that platforms facilitating crypto transactions would need to report gross proceeds from sales and provide transaction details.

However, after the refusal from the crypto industry and positive lawmakers, the rule is now being repealed. The Senate voted 70-28 on March 26 in a desire to overturn the rule, following a similar choice in the House on March 11. Now, the resolution awaits Trump’s approval, which is broadly expected to be granted.

Supporters Back the Repeal of Innovation

Several industry leaders and policymakers have welcomed the decision to repeal the IRS DeFi broker rule. David Sacks, the White House’s AI and crypto advisor, verified that Trump supports the repeal, indicating a shift in the administration’s view on crypto regulation.

Blockchain Association CEO Kristin Smith has additionally backed the decision, arguing that the rule would have negatively impacted DeFi structures and restricted innovation in the crypto space. Additionally, Eli Cohen, general guidance at Centrifuge, criticised the rule, stating that it used to be “unworkable in practice” and would have created unnecessary burdens for decentralised exchanges.

Critics Warn of Tax Evasion and Loopholes

Despite the help from the crypto industry, some policymakers strongly oppose the selection to repeal the IRS DeFi broker rule. Democratic Representative Lloyd Doggett has been one of the most outspoken critics, arguing that repealing the rule creates a “loophole for tax cheats, drug traffickers, and terrorist financiers.”

Doggett stated that wealthy individuals should use decentralised exchanges to avoid taxes and move massive sums of money without oversight. He labeled the repeal as a “special activity exemption” that exceptionally benefits Republican donors who have invested in DeFi platforms.

What This Means for DeFi and Crypto Regulation

With the IRS DeFi broker rule set to be repealed, DeFi systems will no longer be required to file gross proceeds from crypto sales with the IRS. This decision reduces compliance expenses for decentralised exchanges and allows them to function with fewer restrictions.

However, the repeal raises concerns about the future of crypto law in the U.S. Without clear hints from Congress, the industry remains uncertain about what rules might emerge next. Many experts believe that Congress has to take the lead in shaping long-term crypto insurance policies rather than relying on executive orders or transient resolutions.

Congress Repeals IRS DeFi Broker Rule in a Landmark Decision

A bipartisan supermajority of 70 senators voted to repeal the IRS DeFi broker rule, which mandated that DeFi front-ends comply with KYC (Know Your Customer) regulations. The decision, backed by the party, emphasises the trust that Americans need to have the freedom to transact besides strict authorities’ oversight.

1/🚨 New “Broker” CRA Milestone 🚨

With *another* bipartisan super majority of 70 Senators, Congress has repealed the IRS “broker” rule requiring DeFi front-ends to KYC users – ultimately reaffirming that Americans should have the freedom to decide how they transact. pic.twitter.com/AOZttE9Sio

— DeFi Education Fund (@fund_defi) March 27, 2025

The repeal signifies a major victory for the DeFi industry, eliminating tax reporting duties that many argued would affect innovation. The resolution, recognised as H.J. Res. 25, will be passed in the Senate on March 27, 2025, and awaits Trump’s ultimate approval. This aligns with broader efforts to reshape U.S. crypto regulation.

The Future Aspects of Crypto Regulation in the U.S.

The repeal of the IRS DeFi broker rule represents a major turning point for the crypto rules in the U.S. While some see it as a win for innovation, others warn that it could lead to financial misconduct. The choice reflects the ongoing struggle between regulatory oversight and decentralised finance growth.

As Trump is expected to approve the repeal, the focus now shifts to how the authorities will address crypto rules in the long run. Whether this move fosters a greater open blockchain financial device or creates new risks will depend on how the organisation and regulators respond to the changing landscape.