Donald Trump May End IRS DeFi Tax Rule After Senate Vote

A major tax rule targeting decentralized finance (DeFi) could soon be wiped out, as U.S. President Donald Trump Donald Trump   Donald J. Trump is a US-based business tycoon,  pro-crypto politician, and 47th (present) President of the United States. He comprehends the significance and needs of the modern fintech world, and people look up to him as a dominant pro-crypto politician.   Once doubtful about Bitcoin's dominance, he said in a tweet in 2019, “I am not a fan of Bitcoin", but now has a significant amount of cryptocurrency holdings in his pool. He has also signed an Executive Order to establish a Strategic Bitcoin Reserve, which highlights his commitment to the future of cryptocurrency.   Quick Facts   Full name Donald John Trump Birth 14-06-1946, New York, United States Nationality American Education BS from the University of Pennsylvania Famous For Business, Politics   Donald Trump - Career Highlights & Events   2016 – Elected as the 45th President of the United States from the Republican Party.   2017 – Signed the Tax Cuts and Jobs Act, impacting investment environments   2019 – Slammed crypto king Bitcoin on X, calls it "not money".   2025 – A gala party was hosted by him for the top 220 Trump meme coin holders.   President is expected to sign a resolution repealing it. The rule, introduced during the Biden administration, required DeFi platforms to report crypto transactions to the IRS, much like traditional financial institutions.

Senate Votes to Overturn Crypto Reporting Requirements

The Senate voted 70-28 in favor of repealing the rule, following a similar decision by the House earlier this month. The legislation had been widely criticized by the crypto community for being impractical and harmful to innovation. Supporters of the repeal argue that DeFi platforms operate differently from centralized financial entities and should not be subjected to the same reporting rules.

Critics Say the Rule Was Unworkable

Crypto advocacy groups, including the Blockchain Association, praised the Senate’s decision, calling it a victory for DeFi innovation. 

Kristin Smith, CEO of the Blockchain Association, expressed gratitude to Senator Ted Cruz, Representative Mike Carey, and other lawmakers for voting to overturn a rule that could have restricted crypto and DeFi innovation. She emphasized that their leadership helps secure the future of digital assets in the U.S. and is now looking forward to Donald Trump’s final approval to scrap it permanently.

However, some experts argued that the rule was unrealistic and would have placed excessive burdens on decentralized platforms, making compliance nearly impossible.

However, opponents of the repeal, such as Democratic Representative Lloyd Doggett, warned that removing the rule could open doors for tax evasion and illicit financial activities. He claimed that keeping the regulation in place would have helped prevent wealthy investors from exploiting tax loopholes.

What’s Next?

With Trump expected to approve the repeal, the rule will soon be off the books. The decision highlights the shifting political landscape around crypto regulation as the industry gains stronger support in Washington. For now, DeFi platforms can breathe a sigh of relief, knowing they won’t have to comply with the IRS reporting requirements that many saw as an existential threat to the sector.