BREAKING: US Treasury & IRS Axe Crypto Broker Tax Rules for DeFi in Watershed Move

DeFi just dodged a regulatory bullet—for now.

The US Treasury and IRS abruptly repealed controversial crypto broker tax reporting requirements for decentralized platforms today, sending shockwaves through Web3 circles. No more forcing DeFi protocols to play IRS informant on users' transactions.

Why the sudden reversal?

Insiders whisper the original rule was technologically unenforceable—like trying to tax a tornado. DeFi's pseudonymous, cross-border nature made compliance a nightmare even Wall Street's slickest accountants couldn't solve (though they'd bill you $1,500/hour trying).

What's next?

Crypto advocates cheer the rare regulatory retreat, while tax hawks fume about 'another loophole for crypto bros.' Meanwhile, TradFi bankers quietly seethe—nothing kills their buzz faster than decentralized finance actually working.

One thing's certain: this isn't kindness—it's the feds realizing some battles aren't worth fighting. For now.

• The US Treasury repeals crypto broker tax rules targeting DeFi, restoring the previous tax code language.
• Congressional repeal prevents the IRS from reimposing the DeFi rule within the same legal framework.
• House to hold a July 16 hearing on building a modern digital asset tax policy framework.

The U.S. Treasury Department and the Internal Revenue Service have officially revoked a crypto broker tax regulation that ordered decentralized platforms and non-custodial service providers to report user transaction data. The rule, which was finalized in December 2024, was expected to increase crypto broker tax reporting obligations in Section 6045 of the tax code.

In March, Congress voted to repeal the regulation using a Congressional Review Act (CRA) resolution introduced by Senator Ted Cruz. President Donald TRUMP signed the repeal into law in April 2025. The Treasury later confirmed that the rule had been officially removed from the Code of Federal Regulations, restoring the original language that was in place before its adoption.

The repeal concludes a multi-year debate over tax transparency versus technical feasibility in crypto markets. Industry groups, including Coin Center and the Blockchain Association, opposed the rule, arguing that decentralized protocols cannot collect personal user data.

Nevertheless, treasury officials initially estimated that the rule WOULD help recover billions of unpaid crypto broker taxes each year.

DeFi Networks Excluded from Federal Crypto Broker Tax Definition

The repealed rule would have treated non-custodial crypto platforms as brokers and forced them to collect and report their customers’ names, addresses, and transaction details. The obligations would have been similar to those of conventional securities brokers, even though the decentralized finance protocols do not have custody of the user assets.

This repeal also blocks the IRS’s future attempts to present a similar proposal, creating a legal limit on how regulation of digital assets can be achieved under the CRA framework.

In addition, crypto supporters highlighted the technical and operational challenges of enforcing such regulations on autonomous blockchain protocols. The final rule was scheduled to take effect in 2027 but faced repeated opposition due to a lack of understanding of what DeFi infrastructure involves.

Senator Ted Cruz and Representative Mike Carey were among the lawmakers who opposed the rule. They stated that the crypto broker tax rule would damage crypto innovation in the United States and may drive development to foreign countries.

The Joint Committee on Taxation had previously estimated a potential loss to government tax revenue of up to $4 billion in a 10-year period with the repeal of the crypto broker tax rule. Nevertheless, the congressional backers of the repeal prioritized more privacy, technical viability, and innovation in the US DeFi industry. 

House Financial Services Committee Chairman French Hill also described the first rule as an overreach of government control that would impose unnecessary expenses on platforms that do not hold user funds.

Regulatory Shift in Crypto Tax and Oversight Policy

The repeal also supports ongoing efforts by the Trump administration and Congress to update federal policies on digital assets. The Treasury announced that banks and brokerages might be exempt from reporting their clients’ cryptocurrency holdings if they implement appropriate risk management measures. Meanwhile, the SEC clarified that balance sheets do not need to treat every crypto asset as a liability.

State-level crypto laws continue to progress independently. Kentucky recently passed the “Bitcoin Rights” bill, and more than 35 crypto-related proposals remain active in U.S. state legislatures.

As the federal government steps back from some crypto oversight efforts, the House of Representatives is preparing to hold a hearing on July 16 focused on creating a modern digital asset tax framework.

For those asking about GENIUS — as part of Crypto Week, the House is planning to bring it to a full vote on the floor next week alongside CLARITY and the Anti-CBDC Surveillance State Act. If GENIUS passes, it will head to President Trump’s desk. CLARITY and Anti-CBDC will go on…

Lawmakers are also getting ready to vote on legislation related to stablecoins, central bank digital currencies, and market structure under the CLARITY and GENIUS Acts.

This article is based on real-time market data and general technical observations. It does not constitute financial advice. Always conduct your own research before making investment decisions.