TLDR
US Treasury scrapped DeFi crypto reporting rule after Congressional vote.
DeFi platforms no longer required to report IRS transactions, a win for innovation.
Centralized exchanges still face IRS reporting, following Supreme Court’s Coinbase ruling.
Treasury announces crypto-friendly exemptions for banks, signaling regulatory shift.
The US Treasury has officially dropped a crypto broker reporting rule that required decentralized finance (DeFi) platforms to report user transactions to the IRS. This decision follows a vote by Congress to revoke the rule under the Congressional Review Act, which had been signed by President Trump earlier in April 2025.
Crypto Broker Reporting Rule
The crypto broker reporting rule was introduced in December 2024, and it was initially set to take effect in 2027. Under the rule, decentralized platforms like DeFi exchanges would have been required to collect and report customer transaction data to the IRS for tax purposes. The goal was to close the gap in crypto tax compliance, with estimates suggesting that billions in crypto-related taxes were going uncollected every year. However, industry advocates argued that the rule was unfeasible for decentralized platforms and would hinder innovation.
By dropping the rule, the Treasury Department acknowledged the challenges posed by decentralized technology. Unlike centralized exchanges, DeFi platforms do not take custody of user funds, making it difficult, if not impossible, to track transactions in the manner the rule required.
Congressional Efforts to Overturn the Rule
Congress played a crucial role in overturning the rule. A group of Republican lawmakers, including Senator Ted Cruz and Representative Mike Carey, led efforts to challenge the reporting requirement. They argued that the rule would hurt US innovation in the cryptocurrency space and could drive development overseas.
Senator Cruz stated that the rule “directly and immediately would harm American cryptocurrency innovation and drive development overseas.”
The vote to revoke the rule under the Congressional Review Act was a significant win for DeFi advocates, who had expressed concerns that the regulation would stifle technological progress. Despite the potential loss of tax revenue, estimated at nearly $4 billion over ten years, lawmakers prioritized privacy, innovation, and the technical feasibility of the rule.
Continued Obligations for Centralized Exchanges
While the Treasury’s decision marks a victory for DeFi platforms, centralized exchanges still face tax reporting obligations.
This is largely due to the US Supreme Court’s ruling against Coinbase, which required the exchange to provide transaction data for over 14,000 users. The ruling reinforced the idea that records held by third parties, such as exchanges, are not protected by privacy rights.
The court’s decision means that centralized exchanges, which do hold user funds, remain subject to reporting requirements. This is in contrast to DeFi platforms, where users retain control of their assets, making reporting much more complex. As a result, centralized exchanges like Coinbase will continue to comply with tax reporting obligations, while DeFi platforms will be exempt.
Broader Regulatory Changes
In addition to scrapping the crypto broker reporting rule, the Treasury Department has also made efforts to ease regulations on banks and brokerage firms dealing with crypto. The Treasury announced exemptions that will free these entities from reporting customers’ crypto holdings, provided they can demonstrate effective risk management for digital assets.
The move signals a broader shift in US crypto regulation. Federal authorities are making adjustments in response to ongoing pressure from industry stakeholders. However, some regulatory challenges remain, such as the ongoing debate over the SAB 121 accounting rule. While the Senate voted to overturn SAB 121, President Biden vetoed the measure, leaving the issue unresolved for now.
At the state level, 23 US states are considering Bitcoin reserve bills, and 35 other Bitcoin-related proposals are currently under review. These local efforts indicate a growing interest in fostering a favorable environment for cryptocurrency innovation in the US.
The global trend also reflects a push toward more supportive regulation. For instance, Japan’s Senate recently passed amendments that offer crypto brokers greater operational flexibility while maintaining customer safeguards.
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