U.S. Treasury Repeals Crypto Broker Reporting Rule for DeFi Platforms

The U.S. Treasury, in collaboration with the IRS, has officially repealed the crypto broker reporting rule for decentralized finance (DeFi) platforms. This significant policy shift, approved by Congress and signed by President Trump, took place in April 2025. The repeal aims to foster a more innovation-friendly environment by reducing compliance costs and regulatory uncertainty in the DeFi sector.

The rollback of the crypto broker reporting requirements under the Congressional Review Act was supported by Aviva Aron-Dine, acting Assistant Secretary for Tax Policy. Aron-Dine emphasized the importance of streamlined reporting aligned with traditional assets, which would make filing easier and cheaper for compliant taxpayers while also helping close the tax gap. This decision impacts compliant taxpayers and fosters growth in the DeFi sector.

The removal of the reporting requirement favors DeFi developers by minimizing compliance expenses and encourages growth. Ethereum and other associated tokens could experience growth in Total Value Locked (TVL) as platforms face fewer regulatory hurdles. Crypto advocates argue that DeFi's decentralized nature conflicts with traditional reporting practices, thus favoring the repeal.

Despite the repeal, the Treasury remains vigilant on DeFi's regulatory landscape. The decision follows legislative trends easing excessive controls, with historical rollbacks benefiting governance tokens. Innovation opportunities may now expand as regulatory barriers shrink. Future regulations could still emerge, considering DeFi's growth potential and varying global regulatory frameworks. The market is poised for enhanced liquidity and participation due to the reduction in compliance demands.

The Treasury Department's actions ease operational burdens for those in the industry, marking a turning point for DeFi innovation. While transaction processes may become more efficient for platforms and users, close regulatory scrutiny will likely continue. The sector’s trajectory hinges on balancing innovation with security to secure sustainable advancement in financial technology.

The repeal of the rule was a result of strong bipartisan opposition in Congress, which voted to overturn the revised IRS rule through the Congressional Review Act. Both the Senate and the House passed the repeal, with the Senate voting in favor. President Donald Trump signed the bill, effectively reversing the expanded IRS crypto brokers rule. This action by the Treasury Department underscores the recognition that the original intent of broker reporting was to apply specifically to custodial, intermediary exchanges, rather than non-custodial and decentralized entities.

The withdrawal of the rule is seen as a significant victory for the crypto industry, which has long advocated for regulatory clarity and a more favorable environment for innovation. While the repeal does not preclude future rulemaking that might be specifically adapted to non-custodial and decentralized entities, it provides a much-needed respite for DeFi platforms. The industry now has the opportunity to focus on growth and development without the immediate threat of onerous reporting requirements.

The decision by the Treasury Department to simplify DeFi transactions is a testament to the evolving regulatory landscape for cryptocurrencies. It reflects a growing understanding of the unique challenges and opportunities presented by decentralized finance. By removing the reporting rule, the Treasury has taken a step towards fostering an environment where DeFi can thrive, potentially leading to increased innovation and broader adoption of these technologies.