U.S. Treasury Repeals 'Crypto Broker Rules'! DeFi Platforms Are Not Required to Report User Transaction Information

The U.S. Treasury and the IRS announced the formal withdrawal of the controversial cryptocurrency tax rules, which originally required DeFi platforms to report user transaction information to the government, and these regulations are now no longer legally effective.

The resolution to repeal this rule marks the end of years of debate over cryptocurrency taxation and is seen as a significant deregulation for the DeFi industry in the United States. The U.S. Treasury stated in a press release on Thursday:

According to the Congressional resolution and the effectiveness of the Congressional Review Act, this final rule has no legal effect.

The Treasury and the IRS hereby withdraw the final rule from the Federal Register and restore the original text prior to the rule's effectiveness.

The IRS rushed to introduce new regulations at the end of December last year, just before the Biden administration took office, requiring DeFi platforms to submit user personal data and transaction information to the government, similar to traditional securities brokers, and even requiring them to send 1099 tax forms to users, treating DeFi transactions as gambling winnings, rental income, and royalties.

The U.S. Treasury emphasized that these rules apply to 'front-end service providers', which are platforms that interact directly with customers, primarily targeting operators that provide DeFi gateways, and do not directly impact the underlying protocols themselves.

However, experts in the DeFi field and industry insiders widely opposed this new regulation, arguing that it not only infringes on user privacy but is also nearly impossible to enforce technically, as many non-custodial DeFi platforms (like Uniswap) operate entirely differently from traditional brokers. Since transactions are executed automatically through smart contracts, there is no so-called 'middleman', and in some cases, there is even no centralized service provider that 'interacts directly with users', making it fundamentally impossible to determine how to collect user data.

In March of this year, the U.S. Congress overturned this regulation under the Congressional Review Act and formally submitted it for President Donald Trump's signature in April, making it officially effective.

"U.S. Treasury Repeals 'Crypto Broker Rules'! DeFi Platforms Are Not Required to Report User Transaction Information" was first published on (Block Tempo).