U.S. Treasury Rescinds 2024 Crypto Broker Reporting Rule

The U.S. Treasury Department has formally rescinded a tax rule that classified decentralized finance (DeFi) exchanges as “brokers.” This rule, published in December 2024 under the Biden administration, required platforms like Uniswap and PancakeSwap to collect user data and report cryptocurrency transactions to the IRS. After taking effect in February 2025, the rule faced criticism for its technical impracticality.

In March, Congress voted to repeal the regulation. President Donald Trump signed the reversal into law on April 11. The Treasury now confirms the rule holds no legal standing. Regulatory texts revert to their pre-February wording. DeFi platforms no longer need to act as tax informants.

DeFi users remain responsible for reporting taxable gains. The change means the IRS will no longer receive automated transaction reports from platforms. It must rely on individual disclosures. For decentralized protocol developers, this reduces compliance costs and avoids penalties for technical reporting failures.

The repealed rule attempted to treat autonomous software as human entities. Its withdrawal acknowledges that smart contracts cannot perform traditional broker functions. Legal experts note this preserves DeFi’s non-custodial nature. While regulatory challenges persist, the correction relieves immediate pressure on blockchain innovators.

This process reflects a practical adjustment. Lawmakers recognized the original rule’s incompatibility with decentralized technology. The Treasury will now explore alternative approaches to oversee crypto tax activities without imposing centralized models on decentralized infrastructure.

The U.S. Treasury and the Internal Revenue Service (IRS) have officially withdrawn the 2024 crypto broker reporting rule, a move that has significant implications for the digital asset ecosystem. This decision, which was influenced by a Congressional vote, marks a substantial victory for decentralized finance (DeFi) innovation and relieves exchanges and DeFi platforms nationwide from the burden of stringent reporting requirements.

The proposed rule, which was initially set to expand Section 6045 of the tax code to cover DeFi and non-custodial service providers, aimed to bring the nascent cryptocurrency market more in line with traditional financial reporting standards. It required various entities, including cryptocurrency exchanges, payment processors, certain hosted wallet providers, and some DeFi platforms, to collect and report detailed customer transaction and tax information directly to the IRS. The rules were comprehensive, encompassing customer identities, transaction volumes, sales proceeds, and potentially even cost basis information, similar to how stock brokers report trades. The primary goal was to enhance tax compliance and combat potential tax evasion in the crypto space.

The decision to roll back these specific reporting rules is a notable development, suggesting a re-evaluation of the approach to digital asset oversight. The cryptocurrency industry, including major exchanges, blockchain associations, and privacy advocates, consistently lobbied against the broad scope and practical challenges of the proposed rules. They argued that current technology and industry structures made comprehensive implementation difficult, if not impossible, for many entities. The sheer complexity of tracking every single transaction across diverse blockchain networks, especially in decentralized environments, posed immense technical and logistical hurdles for “brokers.” The Treasury may have recognized that the burden outweighed the immediate benefits or that a more tailored approach was needed.

The removal of these specific reporting rules has immediate and significant implications for IRS crypto taxes. For many individuals and businesses involved with digital assets, this news brings a sense of relief regarding compliance burdens. However, it’s crucial to understand what this change does and does not mean. Exchanges won’t be sending your detailed transaction reports to the IRS under these specific rules, but your personal obligation to report crypto income, capital gains, and losses remains unchanged. You are still required to accurately calculate and declare your crypto tax liabilities. This means maintaining meticulous records of all your cryptocurrency transactions, including purchase dates, costs, sale dates, and proceeds. Tools and services designed for crypto tax calculation are more important than ever for individual accountability.

The U.S. Treasury’s decision is not an isolated event but rather a piece of a much larger, constantly evolving puzzle that is cryptocurrency regulations. Globally, governments are grappling with how to effectively oversee digital assets without stifling innovation. This particular rollback might be interpreted as a sign of a more nuanced approach from U.S. authorities, acknowledging the unique characteristics of the crypto market compared to traditional finance. The overarching goal of preventing illicit finance and ensuring tax compliance remains paramount, but the methods to achieve these goals are clearly under review.

The recent announcement about the removal of broker reporting rules provides a fascinating glimpse into the future of digital asset policy in the United States. While this specific hurdle has been cleared, it’s crucial for participants in the crypto space to understand that regulatory scrutiny is far from over. This move could signify a shift towards a more collaborative approach between regulators and the industry, or perhaps a focus on different aspects of the digital asset landscape. There is ongoing bipartisan interest in creating a clear regulatory framework for stablecoins, given their potential role in payments and financial stability. Ensuring the safe custody of digital assets and protecting consumers from fraud and market manipulation will likely remain high priorities. The regulatory status of decentralized finance (DeFi) protocols and non-fungible tokens (NFTs) continues to be debated, with potential for new guidance or legislation. Regardless of reporting rules, efforts to combat illicit financial activities using crypto will intensify, requiring exchanges and service providers to maintain robust AML/CTF programs.

The U.S. Treasury’s decision to remove the proposed crypto broker reporting rules is undoubtedly a significant moment for the digital asset community. It represents a potential pivot towards a more practical and less burdensome approach to regulation, acknowledging the unique challenges and characteristics of the blockchain industry. While the immediate impact is a reduced compliance load for exchanges and intermediaries, the core responsibility for individuals to report their IRS crypto taxes remains steadfast. This move could foster greater innovation and participation in the U.S. crypto market by removing a major point of friction. However, it is vital to remember that this is not a free pass. The broader push for clear cryptocurrency regulations and robust digital asset policy continues. This development simply indicates a refinement in strategy, perhaps favoring more targeted interventions over broad, potentially unworkable mandates. As the crypto world continues its rapid expansion, vigilance, self-accountability, and a proactive approach to understanding the evolving regulatory landscape will be key for all participants.