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<p>Crypto Journalist</p>
<p>Anas Hassan</p>
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<p>Crypto Journalist</p>
<p>
Anas Hassan
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<p>About Author</p>
<p>Anas is a crypto native journalist and SEO writer with over five years of writing experience covering blockchain, crypto, DeFi, and emerging tech.</p>
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<p>Last updated:</p>
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<time datetime="2025-07-10T19:16:36+00:00">July 10, 2025</time>
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<img fetchpriority="high" width="1200" height="673" src="https://cimg.co/wp-content/uploads/2025/07/10191529/1752174929-image-1752174900171_optimized.jpg" class="attachment-post-thumbnail size-post-thumbnail wp-post-image" alt="US Treasury Officially Scraps Crypto Broker Reporting Rules After Congressional Vote" decoding="async" />
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<p>The U.S. Treasury Department has formally <a href="https://news.bloombergtax.com/daily-tax-report-international/treasury-officially-removes-crypto-broker-reporting-rules" target="_blank">withdrawn</a> its proposed regulations for crypto broker reporting. This decision follows a Congressional vote to overturn the rules through the Congressional Review Act, legislation signed into law by the President earlier this year.</p>
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter">đź’Ą BREAKING: CRYPTO TAXES
The US Treasury has removed crypto broker reporting rules — including Form 1099‑DA
It was designed to require crypto brokers, including DeFi platforms, to report users’ digital asset transactions to the IRS for tax compliance
Let’s gooo! 🔥 pic.twitter.com/dpGOASbW3Y
— Real World Asset Watchlist (@RWAwatchlist_) July 10, 2025
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<p>The now-defunct <a href="https://public-inspection.federalregister.gov/2025-12967.pdf" target="_blank">regulation</a>, officially titled “Gross Proceeds Reporting by Brokers that Regularly Provide Services Effectuating Digital Asset Sales,” initially published late last year, aimed to mandate information return filings for certain participants within the decentralized finance (DeFi) sector, starting in late February of this year.</p>
<figure class="wp-block-image">
<img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfGo_VXv1O14PFkYgMuw3g-dB6HdYiXEi5SRd2iNeG-Nwq8W79xRxVS2JB-B5g010i_W9rEX58UmpW0URkyVo6N3OEO2t5N5GFAB6uoqctqKMhAZpblviYGQQGE4qvC3DvmkzcozA?key=yGAeQ_IPFiRz8tGBDBdjHQ" alt="US Treasury Officially Scraps Crypto Broker Reporting Rules After Congressional Vote"/>
<figcaption class="wp-element-caption">Source: federalregister.gov</figcaption>
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<p>According to prevailing legal standards, the rescinded rule is now devoid of any legal standing and is legally considered as if it never existed. This is due to its repeal under congressional authority.</p>
<p>Consequently, the Treasury Department is officially removing the regulation from the federal register and restoring the previous wording, which specifically excluded entities that solely validate distributed ledger transactions or sell hardware designed to manage private keys. These entities are no longer subject to the broker reporting guidelines.</p>
<p>Congressional Republicans mounted a successful challenge to the proposed rules, originally instated during the current administration, which would have categorized DeFi platforms as brokers, imposing substantial data collection and reporting obligations.</p>
<p>While the Treasury Department estimated that billions of dollars in crypto-related taxes go uncollected each year, industry advocates countered that the proposed requirements were simply not feasible for decentralized platforms to implement.</p>
<p>The regulation sparked widespread disapproval due to its perceived misunderstanding of decentralized technology and the potential to drive innovation overseas. This prompted legal action from organizations such as the <a href="https://cryptonews.com/news/blockchain-association-crypto-industry-congress-against-irs-defi-broker-requirement/">Blockchain Association</a> and the <a href="https://cryptonews.com/news/blockchain-association-sues-irs-over-new-crypto-regulations/">Texas Blockchain Council</a>.</p>
Congressional Battle Over DeFi Innovation and Tax Compliance
<p>Senator Ted Cruz, along with Representative Mike Carey, spearheaded the Congressional Review Act resolution. They argued that the rule exemplified government overreach, which would ultimately stifle cryptocurrency innovation within the United States.</p>
<p>Cruz <a href="https://www.cruz.senate.gov/newsroom/press-releases/sen-cruz-rep-carey-colleagues-work-to-overturn-biden-admin-irs-rule-sending-american-cryptocurrency-innovation-overseas" target="_blank">asserted</a> that the regulation “<strong><em>directly and immediately would harm American cryptocurrency innovation and drive development overseas.</em></strong>“</p>
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter">1/ @SenTedCruz’s CRA resolution to roll back the DeFi Broker Rule – anti-crypto, anti-privacy IRS midnight rulemaking – is critical to providing clarity for crypto and DeFi in the US.
Congress should vote YES on the CRA.
This has been a long battle… How did we get here? 👇
— Kristin Smith (@KMSmithDC) February 12, 2025
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<p>The Joint Committee on Taxation has estimated that repealing the rule could potentially reduce government revenue by nearly $4 billion over the next decade.</p>
<p>Despite these projected financial implications, legislators who supported the repeal prioritized concerns about privacy, technical feasibility, and the need to foster innovation, over maximizing tax collection efficiency.</p>
<p>House Financial Services Committee Chairman French Hill also <a href="https://financialservices.house.gov/news/documentsingle.aspx?DocumentID=409501" target="_blank">expressed strong disapproval</a> of the proposal, describing it as excessive government intervention. He argued that classifying DeFi software providers as brokers would impose costly reporting burdens on entities that never actually manage or control user funds.</p>
<p>The regulation was seen as a potential threat to push digital asset development and innovation away from the United States, while simultaneously hindering technological progress.</p>
<p>David Sacks, a White House advisor on crypto and AI, <a href="https://cryptonews.com/news/white-house-crypto-ai-advisor-david-sacks-supports-irs-broker-rule-repeal/">voiced his support</a> for the repeal effort, characterizing the regulation as an “<strong><em>11th-hour attack on the crypto community by the administration.</em></strong>” </p>
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"/>
<p>The administration has positioned itself as being attentive to the concerns of the crypto industry while simultaneously establishing federal working groups to address digital asset regulation.</p>
<p>This successful repeal prevents the IRS from reintroducing similar proposals in the future, marking a significant triumph for advocates of decentralized finance.</p>
Broader Regulatory Shifts Signal Pro-Crypto Policy Direction
<p>Separately, the Treasury Department has declared exceptions that will exempt banks and brokerage houses from the obligation to report customer crypto holdings on financial statements, pending demonstration of efficient risk management capabilities for digital assets.</p>
<p>The Securities and Exchange Commission (SEC) has also begun to release guidelines clarifying that some crypto arrangements may not meet the criteria for liabilities for reporting purposes.</p>
<p>These measures aimed at regulatory relief come in the wake of ongoing congressional pressure to revise the widely debated SAB 121 accounting bulletin.</p>
<p>While the <a href="https://cryptonews.com/news/biden-vetoes-bill-overturning-sec-crypto-accounting-standard-sab-121-heres-what-that-means/">Senate voted to overturn SAB 121 in May</a>, with a substantial majority supporting its repeal, the President's veto prevented the measure from going into effect.</p>
<p>States are continuing to push forward with Bitcoin-related legislation independently of federal action, with over 20 states introducing Bitcoin reserve bills, and more than 30 proposals under consideration.</p>
<p>Subsequently, the Governor of Kentucky <a href="https://cryptonews.com/news/kentucky-governor-signs-bitcoin-rights-bill-into-law-joining-growing-crypto-push/">enacted the “Bitcoin Rights” bill into law</a>.</p>
<p>Looking beyond the United States, Japan's Senate recently approved legal changes that <a href="https://cryptonews.com/news/japanese-senate-approves-crypto-brokerage-reform-bill/">provide crypto brokerage firms with greater operational freedom</a> through the creation of new "intermediary business" categories. These come with fewer regulatory hurdles.</p>
<p>This legislation is designed to create customer safeguards while fostering innovation. It mandates that crypto operators obtain the Prime Minister's approval to hold assets within the country.</p>Trending News
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