This week in crypto, we saw strategic Bitcoin reserves announced in the U.S., strategic Bitcoin withdrawals in El Salvador and heavily criticized DeFi laws overturned.
Just another quiet week in crypto-land.
Bitcoin and Crypto Reserves Signed into Law
In a landmark move, U.S. President Donald Trump this week signed an executive order to establish a Strategic Bitcoin Reserve, utilizing Bitcoin assets seized through legal forfeitures. Keeping an election promise, the initiative ensured that the reserve’s capitalization does not burden taxpayers, as it leverages existing government-held digital assets, which would normally be sold.
The move came the day before the first U.S. crypto summit and the announcement of a separate crypto reserve featuring XRP, ADA, ETH, and SOL, as well as BTC…for some reason.
El Salvador Forced to Drop Bitcoin’s Legal Tender Status
In a significant policy shift, El Salvador was this week forced to amend its Bitcoin Law, revoking Bitcoin’s status as legal tender and making its use optional for private entities. The move was rendered necessary due to requirements set by the International Monetary Fund (IMF) as part of a $1.4 billion Extended Fund Facility (EFF) for the country.
The agreement, which follows tweaks to the country’s Bitcoin law made three months ago, imposes conditions aimed at mitigating risks associated with Bitcoin adoption and enhancing financial transparency. At the same time, however, it undermines the most important aspect of the law, which was brought in in June 2021.
Controversial DeFi Broker Law Voted Down
In rare decisive bipartisan action, the U.S. Senate this week voted 70-27 to overturn an Internal Revenue Service (IRS) regulation that sought to extend tax reporting obligations to decentralized finance (DeFi) platforms.
This regulation, established during the final days of the Biden administration, intended to categorize DeFi platforms as brokers, thereby requiring them to report user transactions to the IRS. However, it met with fierce opposition from the crypto community, which alleged that the new law would be unenforceable, with which senators agreed.
The repeal measure now advances to the House of Representatives; if it passes there, it will proceed to President Trump for final approval.
