The Trump administration is actively supporting legislation to overturn an IRS tax regulation that harms DeFi and crypto users.
The administration is strongly pushing for the resolution’s passage, Trump’s crypto czar David Sacks said on Tuesday.
For the first time, the Trump administration has taken a stance on crypto policy, with President Trump’s crypto czar officially endorsing a bill that prevents the IRS from enforcing strict DeFi reporting regulations.
David Sacks, Trump’s crypto czar, confirmed on Tuesday that the administration is determined to roll back a Biden-era IRS rule that expands the definition of “broker” to include DeFi. The administration is backing a congressional resolution to repeal it.
Many in the crypto space argue that the yet-to-be-enforced rule could severely damage DeFi, as it forces permissionless protocols to comply with regulatory standards originally designed for Wall Street brokers.
“This rule, issued as a midnight regulation in the final days of the previous administration, would stifle American innovation and raise privacy concerns over the sharing of taxpayers’ personal information, while imposing an unprecedented compliance burden on American DeFi companies,” Sacks said in a statement.
According to the Silicon Valley entrepreneur, if the House and Senate pass a resolution to nullify the IRS rule, Trump’s senior advisors will encourage him to approve it.
The crypto sector views the Trump administration’s backing as a necessary measure to secure the future of DeFi innovation in the U.S., and the industry has largely responded positively.
Industry experts argue that decentralized finance protocols cannot realistically comply with broker-reporting regulations intended for centralized financial firms due to the absence of intermediaries.
“This rule would be disastrous for DeFi,” said Ryan Selkis, CEO of Messari. “It would create impossible compliance requirements and push innovation offshore.”
Brian Armstrong, CEO of Coinbase, voiced his opinion, arguing that regulators should implement fair and transparent rules but should not classify DeFi as a broker.
Legislators in Congress are expected to deliberate significantly as they consider repealing the IRS rule.
Although many Republicans support the repeal, certain Democrats argue that the rule is necessary to safeguard against crypto-related tax evasion.
This move aligns with president Trump’s plan to make the United States the crypto capital of the world.
