Decentralized finance achieved a significant milestone in 2025 as the Senate voted 70-28 to eliminate the IRS DeFi broker rule, which was widely criticized as a cumbersome remnant from the Biden administration. President Trump is expected to support this repeal, potentially reshaping crypto innovation and US regulatory frameworks.
What Was the IRS DeFi Broker Rule?
The IRS DeFi broker rule aimed to include decentralized platforms under regulatory compliance, requiring tax reporting on total transaction proceeds and user information. Critics labeled it a bureaucratic imposition, asserting that DeFi platforms typically lack the ability to adhere to such requirements. Opponents contended that the rule could stifle innovation in a sector built around decentralization.
💥 BREAKING:
TRUMP SET TO BLOCK IRS DEFI BROKER RULE.
#XRP’S COMPLIANT INFRASTRUCTURE NOW HAS A MASSIVE REGULATORY EDGE.
THE GATE IS OPEN! source
— STEPH IS CRYPTO (@Steph_iscrypto) March 26, 2025
The Senate’s approval to rescind the rule followed a similar action by the House, indicating a significant shift in the United States’ approach to crypto regulation. Backed by President Trump and crypto advisor David Sacks, the government aims to promote a DeFi environment that encourages innovation without restrictive regulations.
Industry Reactions to the Biden Repeal
The crypto community quickly reacted with praise. Kristin Smith, CEO of the Blockchain Association, lauded the Senate decision as pivotal in eliminating detrimental regulations.
Conversely, opponents, including Representative Lloyd Doggett, warned that dismantling the IRS DeFi broker rule might open doors for tax evasion and illegal activities.
The Road Ahead for DeFi
By addressing the previous administration’s overregulation in relation to cryptocurrency, this repeal creates opportunities for blockchain advancement. Many see this as an opportunity to boost DeFi growth by removing cumbersome regulatory barriers while assigning tax compliance responsibilities to centralized exchanges.
Furthermore, this move is interpreted as a victory by various stakeholders in the industry, signifying a trend towards a more favorable environment for innovation unencumbered by excessive red tape. This repeal sends a clear message to the crypto sector that Washington is aware of the challenges faced by decentralized platforms.
Key Takeaways
- DeFi secured a milestone in 2025 with the US Senate’s vote to revoke the IRS DeFi broker rule, a heavily contested regulation from the Biden administration.
- The rule was considered a barrier to innovation within a decentralization-focused sector.
- This repeal indicates to the crypto sector that lawmakers are attentive to the issues surrounding decentralized platforms.
