Congress Scraps IRS Crypto Broker Rule, Boosts DeFi Innovation

The US Treasury Department has officially cancelled a contentious crypto broker reporting rule that would have required decentralized cryptocurrency exchanges, or DeFi platforms, to submit user transaction data to the IRS. These rules were aimed at treating DeFi platforms like brokers, similar to how stockbrokers report financial activity. However, the rule has now been scrapped after Congress voted to overturn it.

As per the filing, the rule, known as TD 10021 and created under Section 6045 of the tax code, was rejected under the Congressional Review Act. Both the House and Senate passed a resolution to cancel the rule, and President Donald Trump signed the decision into law in April 2025. Because of this, the IRS has officially removed the rule from the tax code.

Many crypto advocates argued that DeFi platforms can’t report user data because they are run by smart contracts, not traditional businesses with employees. They said the rule was unworkable and would hurt innovation in the crypto space. The IRS acknowledged that, under the Congressional Review Act, the rule has “no legal force or effect” and must be treated as if it “had never taken effect.” As a result, DeFi platforms and wallet providers are no longer required to collect or share customer transaction data with the IRS—for now.

The IRS has brought back the older version of the law that was in place before the crypto broker rule. This means people who only help run blockchains or those who create or sell wallet software are not considered brokers right now. So, they don’t have to report user transactions to the IRS. However, new rules could be made in the future as the crypto industry continues to grow and change.

The decision to scrap these rules comes after a successful congressional vote, which highlighted the contentious nature of the regulations. The Treasury Department and the IRS have removed the controversial 'crypto broker' tax rule, which required non-custodial service providers to file customer transaction information. This move effectively ends the IRS data collection requirements for DeFi platforms and wallets, providing a significant relief to the cryptocurrency community.

The elimination of these reporting rules is expected to have a profound impact on the DeFi sector. DeFi platforms, which operate on blockchain technology and often involve smart contracts, had faced significant hurdles in complying with the reporting requirements. The scrapped rules targeted DeFi wallets and smart contracts, making it mandatory for these platforms to provide detailed transaction data to the IRS. The removal of this requirement is likely to boost the growth and innovation within the DeFi space, as platforms can now focus on developing their services without the burden of complex reporting obligations.

The decision to drop these rules is part of broader efforts to create clearer regulations around digital assets in the U.S. The Senate is set to release the draft of the Digital Asset Market Clarity (CLARITY) Act, which aims to provide regulatory clarity around digital assets by defining the roles of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). This legislative push is designed to reduce uncertainty and offer a stable regulatory framework for digital asset businesses and investors.

The CLARITY Act is one of several key pieces of legislation that will be discussed during "Crypto Week," from July 14 to 18. Alongside the CLARITY Act, the House will also discuss the Anti-CBDC Surveillance State Act, designed to prevent the issuance of central bank digital currencies (CBDCs) for retail transactions. Another bill, the GENIUS Act, will propose a federal framework for regulating stablecoins. These legislative efforts underscore the growing importance of digital assets and the need for clear and comprehensive regulations to support their development.