US Repeals DeFi Broker Rule, Ends Crypto Tax Reporting
US Treasury and IRS have officially repealed the controversial DeFi broker rule that would have forced decentralized exchanges and noncustodial wallets to collect and report user identities and transactions on 1099 forms under new crypto tax requirements. Invoking the Congressional Review Act in March 2025, Congress voted to remove the rule from the Code of Federal Regulations, and President Trump signed the repeal in April, restoring pre-rule text.
The original IRS directive, rushed out in December under the 2021 Infrastructure Act, treated DeFi front-end providers like traditional brokers, classifying trades as gambling winnings or royalties and triggering privacy concerns and technical impracticality. The repeal offers significant regulatory relief for the DeFi sector, reduces compliance burdens, and is likely to boost DeFi trading activity and market confidence, signaling an end to the crypto tax debate and underlining a more crypto-friendly stance from US authorities.
Bullish
The repeal of the DeFi broker rule removes a major compliance burden and uncertainty for decentralized exchanges and noncustodial platforms, lowering operational costs and privacy risks. In the short term, traders are likely to reallocate funds into DeFi tokens like UNI, driving price gains. In the long term, this regulatory clarity may encourage broader adoption and new product launches in the DeFi space, supporting sustained bullish momentum across associated cryptocurrencies.