Donald Trump Signs First-Ever Crypto Bill Into US Law

Just a few days ago, President Donald Trump officially signed the first crypto-related bill into US law, a huge moment for the cryptocurrency space.

This is not only the first crypto-related bill enforced by President Trump, but the first crypto-related bill signed into law by any U.S president, according to DeCrypt.

The bill itself was signed to overturn a rule put in place by Biden, which classified decentralised finance (DeFi) platforms as “brokers” by the IRS for tax-reporting purposes.

Trump’s new law removes this rule, protecting user privacy in the cryptocurrency space.

What Are DeFi Platforms?

DeFi platforms use blockchain and cryptocurrency technology to offer financial services like lending, borrowing, trading and earning interest without needing central bank approvals.

By nature, DeFi platforms are decentralised, meaning they don’t just rely on one entity to manage financial transactions. This means they usually come with lower fees and more flexible rates, as they aren’t just set by 1 party.

What Was The IRS Rule?

The regulation, which was passed by Biden, classified DeFi exchanges as brokers, meaning they had to submit all financial data of users to the IRS – the US’s tax body.

This meant that DeFi platforms would have had to report on all customer information, including names and wallet addresses, as well as transaction histories.

Biden’s wanted to prevent these DeFi platforms being used to evade tax – so he created a law that meant all transactions had to be shared with the IRS.

However, this ruling came under a lot of criticism as many argued it was against the privacy that many people sought through using cryptocurrencies and more importantly – that DeFi platforms were not actually set up to be able to collect this data.

The new law, which overturns this initial ruling, was a first-step towards more crypto-friendly policies in the US – something that Trump promised during his election run.

What Crypto Policies Did Trump Promise As Part Of His Election Run?

During his election run, Donald Trump described himself as the ‘pro-crypto’ candidate, promising to make the US the ‘crypto capital of the planet’.

Some things he promised included:

• Creating a bitcoin reserve
• Boosting US-based bitcoin mining
• Removing SEC chair Gary Gensler, who was known for being strict around regulations
• Protecting private custody and mining rights
• Forming a Bitcoin and Crypto Advisory Council

And these promises definitely caught the attention of investors – in fact, Bitcoin even started to rally after he was elected, hitting highs of $103,332 per coin.

For many, this move will be seen as a sign that Trump plans to stick to his original promises, driving forward crypto innovation within the US.

What Does This Mean for DeFi Platforms and Crypto Holders?

For DeFi companies, the news of the repeal is probably a huge sigh of relief.

As these companies weren’t really set up to follow IRS rules, the threat of fines and non-compliance has now faded away.

For crypto holders, whilst they still need to abide by IRS tax laws, it does make the process more straightforward.

What Could The Downside Be?

Whilst the law has been seen as a positive move by many, others have said it could lead to more tax evasion, as the IRS are less able to enforce crypto-related tax compliance.

Whilst centralised exchanges like Coinbase and Kraken will still have to report transaction data, it’s unclear where DeFi companies now sit from a tax perspective.

Some argue that this could make the US a target for those who are looking to hide money and evade their taxes.

Is This The Start Of The US Crypto Revolution?

This law certainly is a strong move towards a more favourable crypto environment – something that President Trump promised during his campaign.

However, it will be interesting to see how crypto regulation evolves from here, and whether The US can become the global crypto capital it promised to be.