U.S. Treasury Scraps Controversial Biden-Era DeFi Reporting Rule

The U.S. Treasury delivered a significant regulatory win for decentralized finance platforms by formally rescinding a contentious IRS reporting requirement. The now-defunct rule, introduced during the Biden administration, mandated that DeFi protocols issue 1099-DA forms for user transactions—a measure widely criticized as incompatible with decentralized systems.

Congressional intervention proved decisive. Lawmakers invoked the Congressional Review Act to nullify the rule earlier this year, with the bill receiving presidential approval in April. The repeal permanently bars the IRS from reinstating similar requirements without explicit congressional authorization, marking a watershed moment for regulatory clarity in DeFi.

While centralized exchanges remain bound by traditional reporting obligations, non-custodial DeFi applications now operate free from broker-style compliance mandates. Users retain personal tax reporting responsibilities, but platforms avoid the administrative burden of implementing know-your-customer protocols on decentralized networks.