The Road to Encryption Tax Reform: Challenges and Opportunities Faced by the Trump Administration

Recently, a wave of reform has erupted in the cryptocurrency sector of the U.S. political arena. On April 10, 2025, President Trump signed a joint resolution of Congress that repealed the previous requirement for decentralized finance (DeFi) protocols to report relevant information to the IRS. This move is seen as a significant boost for the encryption industry, as the original regulation could have severely impacted the DeFi ecosystem.

At the same time, there are widespread rumors in the market that the Trump administration may implement a zero capital gains tax policy for certain domestic encryption projects in the United States. This news has sparked extensive attention and discussion within the industry, as its implementation would greatly reduce the tax burden on investors and could attract more capital into the U.S. encryption market.

However, the shift from Trump's early attitude towards encryption to his current active embrace involves complex political and economic considerations. Although the Trump administration has shown a willingness to promote the development of the encryption industry, it still faces many challenges in the actual policy-making and implementation process.

First, the U.S. Constitution stipulates that the power to levy taxes belongs to Congress, and the President has no unilateral authority to adjust tax rates. This means that any significant tax reform requires a lengthy legislative process. Secondly, the political maneuvering between the two parties may also hinder the passage of related bills. Especially when it comes to sensitive issues like taxation, the Democratic Party is likely to strongly oppose.

In addition, the Trump administration currently seems to prefer supporting the encryption industry through overall policy adjustments rather than directly addressing the legal gray area of tax cuts. This strategy can both avoid direct conflict with Congress and maintain its crypto-friendly image.

However, other economic policies of the Trump administration are also affecting the encryption market. Recently, due to the turmoil in global financial markets caused by the U.S. tariff policy, the market value of cryptocurrencies has experienced a significant correction, nearly wiping out all the gains since Trump's election victory. This phenomenon highlights the close connection between the encryption market and the traditional financial system, and casts a shadow over the Trump administration's encryption-friendly policies.

In summary, although the Trump administration has shown determination to promote the development of the encryption industry, it still faces numerous challenges in practice. Key issues that the Trump administration needs to address include how to advance encryption tax reform within a legal framework, how to balance the demands of different interest groups, and how to coordinate encryption policies with overall economic policies. During this uncertain period, encryption investors and industry participants need to remain vigilant, closely monitor policy trends, and also have a thorough understanding and preparation for market risks.