Donald Trump on Thursday signed his first piece of crypto legislation — a bipartisan bill repealing an Internal Revenue Service rule issued in the waning days of the Biden administration.

The rule classified websites and wallets that allow users to swap crypto as brokers. It would have swept up popular crypto wallet MetaMask or the website of decentralised exchange Uniswap, though not the underlying DeFi protocol.

DeFi apps and wallets were required to begin collecting vast amounts of customer data in the name of preventing tax evasion and helping customers report their taxes to the IRS, according to the now-repealed rule.

It was the first crypto-focused bill signed into law, according to Representative Mike Carey, a Republican from Ohio and the bill’s sponsor.

“The DeFi Broker Rule needlessly hindered American innovation, infringed on the privacy of everyday Americans, and was set to overwhelm the IRS with an overflow of new filings that it doesn’t have the infrastructure to handle during tax season,” Carey said in a statement.

The rule was set to take effect in 2027.

As originally proposed, it would have swept up DeFi protocols themselves, eliciting howls from the industry.

Officials eventually published a watered-down version that applied only to front-end services.

Nevertheless, crypto developers and attorneys warned it could pose an existential threat to decentralised finance, the blockchain-based financial software designed to cut out middlemen such as banks.

As of Tuesday, more than $114 billion in crypto had been deposited across the thousands of DeFi protocols tracked by DefiLlama.

The vast majority of that crypto has been deposited through user-friendly websites and applications, or front-end services, which enable people with little technical expertise to use DeFi protocols.

Some Democrats warned the bill would empower tax cheats.

“The bill before us today would repeal sensible and important Treasury regulations ensuring that taxpayers meet their tax filing obligations, and do not skirt the law by selling cryptocurrency without reporting the gains,” Representative Richard Neal, a Democrat from Massachusetts, said in a February hearing.

Repealing the rule would cost the US government $4 billion, Neal added.

Nevertheless, the bill sailed through Congress, drawing support from most Republicans and dozens of Democrat lawmakers.

“This bipartisan action underscores our nation’s commitment to fostering innovation and ensuring that Americans retain the freedom to choose how they transact,” Amanda Tuminelli, head of crypto advocacy firm DeFi Education Fund, told DL News.

Aleks Gilbert is DL News’ New York-based DeFi reporter. You can reach him at aleks@dlnews.com.