The US Treasury Department officially scrapped crypto broker reporting rules on Thursday, following a vote by Congress to revoke them under the Congressional Review Act, which President Trump signed in April.
The regulation titled “Gross Proceeds Reporting by Brokers that Regularly Provide Services Effectuating Digital Asset Sales” was published December 30, 2024, and is intended to require certain decentralized finance industry participants to file information returns as brokers effective February 28, 2025.
Source: federalregister.govUnder Public Law 119-5 and the Congressional Review Act, the final rule has no legal force or effect and is considered null and void, as if it had never taken effect.
The Treasury is removing the rule from the Code of Federal Regulations and reverting to the previous text, which excluded entities solely engaged in validating distributed ledger transactions or selling hardware for private key control from broker reporting requirements.
Republicans in Congress successfully challenged the Biden-era rule that would have classified DeFi platforms as brokers, requiring extensive data collection and reporting obligations.
The Treasury estimated that billions in crypto-related taxes were going uncollected annually, but industry advocates argued that the requirements were technically impossible for decentralized platforms to implement.
The regulation faced widespread criticism for misunderstanding decentralized technology and potentially driving innovation overseas, prompting legal challenges from the Blockchain Association and Texas Blockchain Council.
Congressional Battle Over DeFi Innovation and Tax Compliance
Senator Ted Cruz led the Congressional Review Act resolution alongside Representative Mike Carey, arguing the rule represented government overreach that would stifle American cryptocurrency innovation.
Cruz stated the regulation “directly and immediately would harm American cryptocurrency innovation and drive development overseas.“
The Joint Committee on Taxation estimated repealing the rule could cost the government nearly $4 billion over ten years in lost tax revenue.
Despite projected losses, lawmakers supporting repeal prioritized privacy, technical feasibility, and innovation over tax collection efficiency.
House Financial Services Committee Chairman French Hill also condemned the proposal as excessive government intervention, arguing that defining DeFi software providers as brokers would create costly reporting obligations for entities that never take custody of user funds.
The regulation threatened to push American digital asset development overseas while undermining technological progress.
White House Crypto Czar David Sacks supported the repeal effort, calling the regulation an “11th-hour attack on the crypto community by the Biden administration.”
The administration positioned itself as strongly supportive of crypto industry concerns while establishing federal working groups on digital asset regulation.
The successful repeal prevents the IRS from reintroducing similar proposals in the future, marking a significant victory for DeFi advocates.
Broader Regulatory Shifts Signal Pro-Crypto Policy Direction
The Treasury Department separately announced exemptions that will free banks and brokerage firms from reporting customers’ crypto holdings on financial statements, contingent upon demonstrating effective digital asset risk management capabilities.
The SEC began issuing guidance clarifying that some crypto arrangements might not qualify as liabilities for reporting purposes.
These regulatory relief measures came amid sustained Congressional pressure to revise the controversial SAB 121 accounting bulletin.
While the Senate voted to overturn SAB 121 in May with 60 senators supporting repeal, President Biden’s veto prevented the measure from taking effect.
States continue advancing Bitcoin legislation independently of federal action, with 23 states introducing Bitcoin reserve bills and 35 proposals under consideration.
In fact, following that, Kentucky Governor Andy Beshear signed the “Bitcoin Rights” bill into law.
Beyond the United States, Japan’s Senate has also recently approved legal amendments that give crypto brokerage firms increased operational freedom through new “intermediary business” categories, which come with reduced regulatory barriers.
The legislation creates customer safeguards while promoting innovation, requiring the Prime Minister’s approval for crypto operators to hold assets domestically.
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