By: Swarnalata
Published on: Apr 14, 2025
On April 10, 2025, the cryptocurrency market witnessed a significant shift as President Donald Trump signed a bill into law that repealed a Biden-era regulation imposing strict tax reporting requirements on decentralized finance (DeFi) platforms. The news sent Bitcoin (BTC-USD) and other cryptocurrencies soaring, marking a pivotal moment for the crypto industry. This legislative change, hailed as the first crypto-specific bill signed into U.S. law, has sparked optimism among investors, developers, and industry leaders, signaling a potential turning point for DeFi innovation in the United States. In this blog post, we’ll dive into the details of this landmark decision, explore its implications for the crypto landscape, and analyze why Bitcoin’s price surged in response, drawing insights from industry experts like Kamal Mokeddem, General Managing Partner at Finality Capital, who recently discussed the development on Yahoo Finance’s Catalysts with Madison Mills and Brian Sozzi.
To understand the significance of Trump’s repeal, we must first examine the rule it overturned. Finalized in late 2024 by the Internal Revenue Service (IRS) under the Biden administration, the regulation stemmed from the 2021 Infrastructure Investment and Jobs Act, which aimed to tighten tax compliance in the cryptocurrency sector. The rule expanded the definition of a “broker” to include DeFi platforms, requiring them to report user transaction data to the IRS, much like traditional financial institutions such as stock brokerages. Specifically, DeFi operators were mandated to issue Form 1099 tax returns and collect detailed trading information from users, even though DeFi protocols typically operate without centralized control or direct access to user identities.
Critics, including lawmakers, developers, and crypto advocates, argued that the rule was fundamentally misaligned with the decentralized nature of DeFi. Unlike centralized exchanges like Coinbase or Kraken, which custody user assets and maintain identifiable accounts, DeFi platforms rely on smart contracts and blockchain technology to facilitate peer-to-peer transactions. Imposing traditional brokerage requirements on these protocols was seen as technically unfeasible and stifling to innovation. Republican Senator Ted Cruz, a vocal supporter of the repeal, noted, “The Biden administration’s rule attempts to drive American cryptocurrency innovation overseas. These regulations undermine the purpose of DeFi technology.” The DeFi Education Fund and Uniswap, a leading DeFi protocol, also backed the repeal, emphasizing that the rule risked pushing developers and projects out of the U.S. to jurisdictions with more favorable regulations.
The regulation, set to take effect in 2026, was criticized as a “midnight regulation” rushed through in the final weeks of the Biden administration. Lawmakers, including Representative Mike Carey of Ohio, argued that it overstepped the IRS’s authority and compromised user privacy while overwhelming the agency with unenforceable demands. The bipartisan support for its repeal—evidenced by votes in both the House and Senate under the Congressional Review Act—underscored growing concerns about federal overreach in the rapidly evolving crypto sector.
President Trump’s decision to sign the repeal into law on April 10, 2025, was met with widespread approval from the crypto community. The White House, under Trump’s leadership, had already signaled its intent to foster a pro-crypto environment with actions like establishing a federal Bitcoin reserve and launching a cryptocurrency working group to propose new digital asset regulations. The repeal of the IRS rule was a concrete step toward fulfilling Trump’s campaign promise to make the U.S. the “crypto capital of the world.”
Representative Carey, who attended the signing, called it a historic moment, stating, “By repealing this misguided rule, President Trump and Congress have allowed the IRS to return its focus to the duties and obligations it already owes to American taxpayers instead of creating a new series of bureaucratic hurdles.” House Ways and Means Committee Chairman Jason Smith echoed this sentiment, emphasizing that “Congress, not regulators, writes tax law.” The repeal not only alleviates the compliance burden on DeFi platforms but also sets a precedent for future crypto legislation, signaling that the Trump administration prioritizes innovation over restrictive oversight.
The immediate market response to the repeal was striking. Bitcoin, the world’s largest cryptocurrency by market capitalization, surged, climbing back above $80,000 after a volatile week. Other cryptocurrencies, including Ethereum, XRP, Solana, and Cardano, also saw significant gains, reflecting broad optimism about the regulatory shift. But what drove this rally, and why did Bitcoin, in particular, “pop” as Yahoo Finance reported?
Kamal Mokeddem, General Managing Partner at Finality Capital, provided valuable insights during his appearance on Catalysts. He highlighted the interplay between macroeconomic conditions and crypto prices, noting that “the number one driver of crypto prices is macro conditions.” While the repeal was a clear catalyst, Mokeddem cautioned that broader economic trends—such as tightening monetary policy or global trade tensions—continue to influence market dynamics. “When macro conditions are tightening,” he explained, “our strategy is to take risk off to avoid downside volatility and put that risk back on to capture the upside.”
The repeal’s timing was critical. In recent weeks, Bitcoin had faced pressure from Trump’s tariff announcements, which sparked a broader sell-off in risk assets. Investors, wary of trade wars and economic uncertainty, had pulled back from cryptocurrencies. However, the repeal restored confidence, particularly in DeFi, which is seen as a cornerstone of crypto’s future. By removing a regulatory overhang, the Trump administration signaled that the U.S. is open for crypto business, encouraging developers to innovate domestically rather than seeking refuge in jurisdictions like Singapore or Switzerland.
Mokeddem also addressed Bitcoin’s evolving role in financial markets. Historically viewed as a “safe haven” during risk-off periods, Bitcoin has struggled to maintain that status in 2025 amid macro headwinds. “You go back in the past, and people would flock to Bitcoin,” he noted, but “macro conditions were tightening for whatever reason.” The repeal, however, provided a counterbalance, reinforcing Bitcoin’s appeal as a hedge against regulatory uncertainty and a beneficiary of pro-crypto policies.
The repeal’s impact extends far beyond Bitcoin’s price action. For DeFi platforms, the removal of the IRS rule eliminates a looming threat that could have crippled innovation. DeFi, which enables financial services like lending, borrowing, and trading without intermediaries, thrives on its decentralized architecture. Forcing these platforms to comply with centralized reporting requirements would have undermined their core value proposition and driven development overseas.
The Coincu research team predicts “lasting impacts on DeFi platforms,” potentially attracting more developers to the U.S. as the regulatory environment becomes more hospitable. Uniswap, one of the largest DeFi protocols, saw its token (UNI) rise modestly despite a broader 90-day price decline, suggesting that the repeal could stabilize sentiment in the sector. Industry leaders hope this move will pave the way for clearer, more tailored regulations that respect the unique characteristics of blockchain technology.
For retail investors, the repeal underscores the importance of staying informed about regulatory developments. Mokeddem advised approaching crypto with a disciplined strategy, reducing exposure during periods of macro uncertainty and capitalizing on opportunities like the current rally. “From the retail investor’s perspective,” he said, “it’s about capturing upside potential without suffering the downside volatility.”
President Trump’s repeal of the Biden-era crypto tax rule marks a turning point for the U.S. crypto industry. By dismantling a regulation that threatened DeFi’s growth, the administration has reaffirmed its commitment to fostering innovation and positioning the U.S. as a global leader in digital assets. Bitcoin’s surge reflects the market’s approval, but the real story lies in the broader implications for DeFi, regulatory clarity, and investor confidence.
As Kamal Mokeddem emphasized, macro conditions will continue to shape crypto’s trajectory, but policy shifts like this one can create powerful tailwinds. For now, the crypto community celebrates a hard-fought victory, with eyes on the horizon for what Trump’s pro-crypto agenda will deliver next. Whether it’s stablecoin legislation, a national Bitcoin reserve, or a comprehensive regulatory framework, one thing is clear: The U.S. is entering a new era for cryptocurrency, and the world is watching.
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