The IRS officially abolishes controversial tax rules for DeFi brokers, marking a significant victory for encryption privacy rights.

The U.S. Treasury and the IRS (IRS) recently announced the repeal of the controversial "cryptocurrency broker tax reporting rules," which required DeFi protocols and other decentralized trading platforms to collect and submit user transaction information. This is seen as a significant victory for the cryptocurrency sector and user privacy rights, and it symbolizes the current friendly attitude of the Trump administration towards cryptocurrency policy.

DeFi Becomes a Tax Revenue Breakthrough: The Birth and Expansion of Cryptocurrency Broker Regulations

The IRS rules, originally scheduled to take effect in 2027 and described by Trump as the "apocalypse bill," were first proposed by the Biden administration in the "infrastructure bill" in 2021 and passed at the end of December last year as he was leaving office. They attempt to expand existing tax reporting obligations by requiring all DeFi protocol platforms to report all users' transaction data, specifically including:

Require decentralized exchanges (DEX), non-custodial wallets, and other DeFi protocols to report user personal information, including name, address, and transaction details, similar to traditional brokerage firms.

Require operators to send 1099 forms, which report non-employee income ( such as gambling winnings, rent, or royalties in the tax form ).

The target audience is "the platform or website that provides an interface for users to enter Decentralized Finance (DeFi)."

Although the Ministry of Finance continuously revised the provisions at that time to exclude miners and node operators, it still finalized the regulations for "DeFi brokers" in December 2024, leading to widespread controversy and strong backlash.

( The new regulations from the US IRS have triggered a DeFi crisis! DeFi operators unite to file a lawsuit to defend innovation, a16z: The Treasury Department has exceeded its authority )

Technical infeasibility and privacy controversy: The DeFi community strongly protests

For decentralized applications, this regulation can be said to be an obstruction. Most DeFi protocols are automated smart contracts, and there are no intermediaries that can extract user data. Industry professionals criticize that this policy is not only technically unfeasible but also seriously threatens user privacy and innovation space.

Today, the U.S. Department of the Treasury stated in a statement on Thursday: "Based on the operation of the joint resolution and the Congressional Review Act (CRA), this final rule is no longer legally effective."

The Department of the Treasury and the Internal Revenue Service hereby remove this final rule from the Federal Register (CFR) and restore the relevant provisions to their original version prior to the effective date of the final rule.

(Trump signed the repeal of the controversial DeFi platform tax rules of the IRS, becoming the first effective encryption bill in the United States)

Congress reverses course, Trump signs: U.S. crypto regulation shifts to friendly

In March 2025, AI encryption czar David Sacks revealed that Congress had passed a resolution to abolish the rule, which was formally submitted to President Trump for signing on April 11.

The decision is seen as a clear stance of the Trump administration and the Republican camp in support of the encryption industry, also setting a different tone for future encryption regulation in the United States. While the Democratic Party advocates a conservative and strict approach, the Republican Party chooses to loosen restrictions and support innovation, adding a clear contrast to the policy direction.

( Regulatory easing sparks a wave of exchange IPO listings: Who can replicate CRCL's surge to become the next doubling stock? )

Outlook after policy easing: The encryption community puts down the weight on their minds.

Although the repeal of the rules does not mean that the United States is fully relaxing encryption regulation, this move does create breathing room for the DeFi sector. The industry believes that in order to promote effective regulation in the future, the system should be designed based on technological realities and user interests, rather than forcibly comparing it to the inherent regulations and models of traditional finance.

This article reports that the IRS has officially abolished the controversial tax rules for DeFi brokers, marking a significant victory for encryption privacy rights. It first appeared on Chain News ABMedia.