By Hannah Lang
(Reuters) – US President Donald Trump signed a bill on Thursday that overturned revised rules from the Internal Revenue Service, which expanded the definition of brokers to include decentralized cryptocurrency exchanges, according to a White House statement.
In the final weeks of the Biden administration in December, the IRS updated its crypto tax reporting rules to make it clear that its new guidelines would also apply to decentralized financial or opposition exchanges in early 2024.
In March, both the House and Senate voted to override the amendment through the Congressional Review Act.
The cryptocurrency industry has denounced the revised rules, arguing that it was infeasible for the debt platform, and called on Republicans to withdraw it.
While centralized exchanges such as Coinbase and Kraken act as intermediaries between buyers and sellers, Defi Exchange aims to reduce intermediaries and allow users to trade directly on the blockchain network that drives cryptocurrency.
Participants in the Crypto industry argued that it would be impossible to comply with IRS rules as Defi Exchange does not act as an intermediary and therefore do not recognize who the user is.
The new IRS framework, which was finalised last year, aims to crack down on crypto users who may have failed to pay taxes, resulting from a $1 trillion bipartisan 2021 infrastructure investment and employment law. Digital asset brokers had to submit forms to both the IRS and the digital asset owners to help prepare for taxes.
On the campaign trail, Trump sought cash from the industry by pledging to become “crypto president” and promoting the adoption of digital assets.
In his first week of office, Trump ordered the creation of a cryptocurrency working group tasked with proposing new digital assets regulations, and signed an executive order in March to create a federal reserve of Bitcoin.
(Reporting by Hannah Lang of New York, additional reports by Ismail Shakil, edited by Lincoln Feast.)