According to Bloomberg, the U.S. Treasury Department has officially scrapped crypto broker reporting rules (TD 10021, RIN 1545-BR39) that would have required decentralized finance (DeFi) platforms to report customer transaction data to the IRS. These rules, initially set to take effect in 2027, were repealed by Congress under the Congressional Review Act, with President Trump signing the resolution in April 2025.
The decision is seen as a significant win for the crypto industry, particularly for DeFi, as it reduces compliance burdens and supports innovation by excluding decentralized platforms from broker reporting requirements. Custodial exchanges like Coinbase remain subject to reporting, but DeFi protocols and front-end developers are now exempt.
Exempting DeFi platforms from IRS reporting requirements reduces operational and compliance costs, allowing developers to focus on innovation. This could accelerate growth in DeFi, which relies on decentralized protocols and smart contracts, fostering new financial products and services. DeFi platforms can now operate with less fear of regulatory overreach, potentially attracting more developers and users to the ecosystem.
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The decision creates a clear distinction between custodial platforms (e.g., Coinbase, Binance), which must still comply with IRS reporting, and non-custodial DeFi platforms, which are exempt. This reinforces a regulatory divide where centralized entities face stricter oversight, while decentralized ones gain more freedom. Custodial exchanges may face competitive disadvantages due to higher compliance costs, potentially pushing some users toward DeFi alternatives.
The IRS loses visibility into DeFi transactions, complicating efforts to track taxable events like capital gains. This could lead to increased tax evasion risks, prompting future regulatory efforts to address gaps in enforcement without stifling innovation. The Treasury may need to explore alternative methods, such as wallet-level reporting or blockchain analytics, to monitor DeFi activity.
The repeal, signed by President Trump in April 2025, signals a pro-crypto stance, aligning with industry advocacy from groups like the Blockchain Association. This could embolden further lobbying for crypto-friendly policies. However, it may deepen tensions with regulators and lawmakers who prioritize consumer protection and anti-money laundering (AML) measures, as DeFi’s pseudonymity raises concerns about illicit activity.
The U.S. move could pressure other jurisdictions to relax DeFi regulations to remain competitive, potentially leading to a global race for crypto-friendly policies. Conversely, stricter regimes (e.g., EU’s MiCA framework) may contrast with the U.S. approach, creating a fragmented regulatory landscape for global crypto businesses. Custodial platforms like Coinbase remain subject to broker reporting rules, requiring them to collect and report user data (e.g., Form 1099).
This creates a compliance burden, potentially alienating privacy-focused users. Non-custodial DeFi protocols, lacking a central entity, are now exempt, reinforcing their appeal as privacy-centric alternatives. This could drive user migration from centralized to decentralized platforms, intensifying competition. Crypto advocates celebrate the repeal as a victory for innovation and individual freedom, arguing that DeFi’s decentralized nature makes traditional broker rules inapplicable.
Regulators and critics, however, worry about reduced oversight, citing risks of tax evasion, money laundering, and investor harm in DeFi’s largely unregulated space. This divide may fuel ongoing debates over how to regulate decentralized systems. The repeal, backed by a Republican-led Congress and President Trump, reflects a pro-business, deregulation agenda. Democrats and consumer protection advocates may push back, arguing for stronger safeguards, highlighting a partisan split on crypto policy.
This political divide could shape future legislation, with crypto becoming a wedge issue in U.S. politics. Retail users benefit from DeFi’s lower barriers and privacy but face risks from scams and volatile markets without regulatory protections. Institutional investors may prefer centralized platforms for compliance and security, deepening the divide between retail-driven DeFi and institutional crypto adoption.
The Treasury’s decision to remove DeFi broker reporting rules is a landmark win for the crypto industry, particularly DeFi, fostering innovation and user privacy. However, it widens the regulatory gap between centralized and decentralized platforms, complicates tax enforcement, and fuels debates over balancing innovation with oversight. The divide between pro-crypto advocates and regulatory hawks will likely intensify, shaping the future of U.S. crypto policy and its global influence.