Trump signs bill loosening cryptocurrency regulations

President Trump on Thursday signed into law a bill that loosens cryptocurrency regulations by shielding decentralized finance (DeFi) exchanges from IRS requirements that such platforms be treated as brokers and that they track and report user activity. 

The bill reverses a rule implemented in the final weeks of the Biden administration, which required the IRS to strengthen its crypto tax reporting guidelines to expand to DeFi exchanges. 

The cryptocurrency community slammed the revised rule saying it unfairly constricted activity on DeFi platforms. They called on Republican lawmakers to rescind the rule. 

Crypto industry leaders said because DeFi exchanges don’t act as intermediaries they can’t see who their users are, making it impossible to comply with the IRS’s demands.

In March both the House and Senate voted to cancel the revision through the Congressional Review Act, which empowers Congress to reverse new federal rules with a simple majority vote. 

Though the measure targets a relatively limited part of the crypto landscape, it marks the first time a cryptocurrency bill cleared Congress and was signed into law by a president. 

The IRS adopted the framework last year to crack down on crypto users who were using the DeFi platform to skirt tax losses. 

The provision in the $1 trillion bipartisan 2021 Infrastructure Investment and Jobs Act required digital asset brokers to send the forms to both the IRS and digital asset holders to assist with their tax preparation. 

During the 2024 campaign, Mr. Trump branded himself the cryptocurrency president pledging to loosen restrictions and position the federal government to be more friendly to the industry.