Trump Signs Resolution to Eliminate IRS DeFi Broker Rule

DeFi No Longer Classified as Broker: Trump Overturns IRS Rule

In a major development for the crypto industry, President Donald Trump has officially signed a resolution eliminating the IRS rule that previously classified decentralized finance (DeFi) platforms and crypto wallets as brokers. The decision marks a pivotal shift in how decentralized applications are regulated in the United States and is being hailed as a victory for privacy, innovation, and decentralization in the Web3 space.

What the Rule Meant and Why It Mattered

The IRS rule, originally introduced under the 2021 Infrastructure Bill, sought to classify a wide range of crypto entities—including DeFi protocols, decentralized exchanges (DEXs), and self-custodial wallets—as brokers.

This classification would have required developers and wallet providers to:

• Report customer transactions and identities to the IRS
• Collect tax information on users similar to centralized financial platforms
• Comply with KYC/AML frameworks designed for traditional brokerages

Critics argued that the rule was technically unfeasible and overreaching, especially for non-custodial platforms that do not control user assets or have access to personal data.

Why This Reversal Matters

Trump’s approval of the resolution effectively removes these burdensome requirements, giving developers and users greater freedom to innovate and transact without centralized reporting constraints.

Key Impacts:

• Boost for DeFi Development: Startups and protocols can now build without fear of violating brokerage compliance laws.
• Stronger Privacy Protections: Users of non-custodial wallets are no longer subjected to excessive reporting demands.
• Legal Clarity for Builders: DeFi developers gain a clearer regulatory path, helping attract more capital and talent to the U.S. crypto space.

What’s Next for DeFi in the U.S.?

While this marks a significant regulatory win, industry experts caution that further clarity is still needed in areas like:

• Tax treatment of staking and liquidity rewards
• Guidelines for DAO governance and treasury operations
• Cross-border compliance for global DeFi protocols

Still, the removal of the broker rule removes a major roadblock and repositions the U.S. as a more favorable environment for decentralized finance innovation.

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