DeFi TVL Drops Over 30% Since December Peak, Data Reveals
The total value locked (TVL) in decentralized finance (DeFi) has plummeted more than 30% since reaching a local high in December, underscoring growing market uncertainty and waning investor confidence.
According to data from DefiLlama, DeFi’s TVL currently sits at $94.49 billion, a sharp decline from its $137 billion peak on December 17. The value briefly dropped as low as $88 billion in March.
DeFi Slump Reflects Broader Crypto Pullback After Post-Election Rally
The downturn mirrors the broader pullback in the cryptocurrency market, which had initially rallied following the November 5 election of pro-crypto U.S. President Donald Trump. At the time, investor optimism pushed DeFi TVL beyond the $100 billion mark. However, the enthusiasm has since faded amid growing macroeconomic concerns and regulatory challenges.
The bullish momentum that followed Trump’s victory was overshadowed by a series of economic headwinds, including sweeping new reciprocal tariffs and persistent inflation concerns. The Federal Reserve’s extended pause on interest rate cuts has further dampened market optimism.
Bitcoin has since fallen from an all-time high above $108,000 in January to around $83,000, while Ether slid from $4,000 in December to roughly $1,800.
At the same time, regulatory uncertainty in the U.S. continues to cast a shadow over DeFi’s future. Dan Greer, co-founder of DeFi App, recently told Cryptonews.com that DeFi represents more than just a financial alternative—it is a potential evolution of the global financial system. However, he warned that unresolved regulatory issues may drive talent and innovation offshore.
“Mass adoption of DeFi hinges on solving its biggest barriers: complexity, cost, and accessibility,” Greer said. He stressed that the right regulatory approach could accelerate adoption by enabling innovation while protecting users.
The U.S. faces growing pressure to provide legal clarity. Countries like Switzerland, Malta, and Singapore have already introduced well-defined regulatory frameworks that foster DeFi growth while ensuring compliance and investor protection.
U.S. Senate Repeals Controversial “DeFi Broker Rule” in Major Policy Shift
In August 2023, the U.S. Internal Revenue Service proposed the controversial “DeFi broker rule.” It aimed to mandate certain DeFi operators—including front-end service providers for decentralized exchanges—to collect and report user transaction data, including gross proceeds from crypto sales. On March 4, 2025, the U.S. Senate voted 70-27 to repeal the rule. Shortly after, on March 11, 2025, the House of Representatives followed with a vote of 292-132 in favor of nullifying it.
The repeal effort saw bipartisan support, with 76 Democrats joining Republicans in overturning the rule. Despite its potential, DeFi still faces major hurdles that prevent it from reaching a mainstream audience. According to Greer, the three biggest barriers are “complexity, cost, and accessibility.”
Many DeFi platforms require users to understand concepts such as private keys, gas fees, and blockchain interoperability. This steep learning curve discourages widespread adoption, particularly among retail investors. “The centralized exchange market generates $40 billion annually but serves only a fraction of its potential, with less than 20 million of 631 million CEX users having tried DeFi due to complexity barriers and concerns over asset custody,” Greer explained.