Trump Admin Throws Weight Behind Bill to Repeal Anti-DeFi IRS Crypto Tax Rule

President Donald Trump’s crypto czar has officially endorsed legislation that would prevent the IRS from imposing strict reporting rules on decentralized finance projects—marking the first time the Trump administration has explicitly weighed in on pending crypto policy.

David Sacks, Trump’s crypto policy chief, said on Tuesday that the White House “strongly supports” passage of a joint congressional resolution that would undo a controversial Biden-era IRS rule expanding the definition of “broker” to include most DeFi projects. 

Many in the industry contend the rule, which has yet to go into effect, could all but eliminate the DeFi sector by obligating permissionless protocols to conform with stringent reporting requirements 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.

The Silicon Valley entrepreneur added that should the House and Senate pass a resolution to undo the IRS rule, Trump’s senior advisors would recommend the president sign it into law.

Last week, a House committee voted to advance the measure to a full floor vote. Meanwhile, in the Senate, a version of the resolution introduced by Sen. Ted Cruz (R-TX) has 13 co-sponsors, all Republican. The legislation would need to pass through both chambers with simple majorities before it would head to Trump’s desk to be signed into law.

Industry advocates say the IRS rule, as it currently stands, would be unfair to DeFi users and impossible to comply with for DeFi protocols. It would obligate all American DeFi users to tie their on-chain addresses to their identities, a touchy subject in the privacy-prone realm of decentralized finance.

It would also force permissionless DeFi protocols—automated systems run by smart contracts that in many cases do not involve human oversight—to register like brick-and-mortar Wall Street brokerage firms with traditional corporate leadership structures.

On Tuesday, crypto policy leaders rushed to thank Sacks and the Trump Administration for putting their weight behind the effort to stop the IRS’ new rule from going into effect.

Coin Center, a Washington-based crypto lobbying group, was one such organization that cheered the announcement. Just a day prior, the group’s executive director Peter Van Valkenburgh wrote that while “there has been much talk” of American politicians becoming friendlier towards crypto, the upcoming vote on overturning the IRS’s new broker rule will constitute “a decisive first test of that theory.”

Editor’s note: This story was updated after publication with additional details.

Edited by Andrew Hayward