Biden-era rules would have significantly expanded the tax reporting requirements for digital asset transactions.
President Donald Trump signed the law on Thursday, signing a resolution from the IRS overturning Biden-era rules that expanded the definition of brokers to include decentralized cryptocurrency exchanges.
Rep. Mike Carey (R-Ohio) introduced a resolution to disapprove the Congressional Review Act, which abolished the IRS digital assets sales and exchange rules, also known as the “Defi Broker Rule.”
Carrie thanked Trump for signing the law.
“The rules for DEFI brokers were set to overwhelm the IRS with a new filing overflow that was violated by the privacy of everyday Americans and lacked infrastructure to handle during tax season,” Carrie said.
“By repealing this misguided rule, President Trump and Congress have given the IRS the opportunity to focus on the obligations and duties they already owe to American taxpayers, instead of creating a new set of bureaucratic hurdles.”
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The rules significantly expanded the tax reporting requirements for those involved in digital asset transactions by requiring distributed finance (DEFI) brokers to report the total revenue from the sale of digital assets through Form 1099.
This rule has placed brokers the same reporting rules as brokers for securities and operators on the custodial digital asset trading platform, despite significant differences between the two.
Centralized exchanges such as Coinbase and Kraken act as intermediaries between buyers and sellers, but Defi Exchange is not centralized, and does not act as third-party intermediaries, allowing users to trade directly on blockchain networks that enhance cryptocurrency.
Due to differences in the Defi Exchanges Act, we do not collect the information necessary to comply with IRS rules.
The rules did not modify or impose new tax obligations on digital assets, as taxpayers are always obligated to include profits from the sale or exchange of digital assets in their income.
“The Defi Broker rules, finalized on the Biden administration’s decline, represent a regulatory overload that fundamentally misunderstood and fundamentally misconstrued the technology seeking to regulate Congressional intent,” he said in the letter.
In March, both the House and Senate voted to override the amendment through the Congressional Review Act.
On the campaign trail, Trump pledged to be “crypto president” and promoted the adoption of digital assets.
The Blockchain Association welcomed Trump’s actions in a statement saying, “Innovators, builders and developers in our industry can breathe again.”
The Epoch Times contacted the White House for comments.
Reuters contributed to this report.
