The U.S. Treasury Department and IRS officially revoked the code of encrypted money brokers and the DeFi industry turned around

The United States Department of the Treasury and the Internal Revenue Service (IRS) have formally removed the code of encrypted currency brokering requiring the submission of customer transactional information for tax purposes by decentralised exchanges and other agreements. This official decision brought to a close the years of debate surrounding the controversial provision and marked a major policy adjustment to the encryption industry, particularly in the area of decentralised finance (DeFi).

This final rule no longer has the force or effect of law, according to the Parliamentary Review Bill (CRA). “The Ministry of Finance and IRS hereby remove this final rule from the Collection of Federal Regulations (CFR) and restore the relevant text to the version before the effective date of the final rule. The Ministry of Finance wrote in its statement on Thursday.

The Biden Government initially attempted to fill the so-called information gap by implementing the “encrypted money broker” rule through the Infrastructure Investment and Employment Act of November 2021, with the aim of broadening the definition of “broker” to cover participants in encrypted networks. Although the Ministry of Finance relaxed its definition to exclude encrypted miners or nodal operators who were unable to collect customer transaction data, IRS finalized the rules for the “DeFi broker” in December 2024.

Under this provision, non-host service providers must collect the names and addresses of their clients for tax purposes, as do traditional securities brokers. However, this rule was strongly opposed by DeFi industry participants, who did not believe that the Autonomous Area Block Chain Agreement had the capacity to collect such data.

Senator Ted Cruz of Texas led an effort to introduce the CRA resolution aimed at abolishing the encrypted currency rule of IRS, and progress was made in January this year. Eventually, Congress voted to overturn the code of encrypted money brokers in March, and President Donald Trump signed a resolution to repeal the rule on 11 April.