US Treasury Considers Repealing Bitcoin Tax Reporting Rule, Signaling Potential Shift in Crypto Policy

• The US Treasury has officially moved to repeal TD 10021, RIN 1545-BR39, a contentious crypto tax reporting rule originally scheduled for implementation in 2027.

• This repeal removes the obligation for crypto vendors to act as brokers, alleviating significant compliance burdens on decentralized finance (DeFi) platforms.

• According to COINOTAG, this policy shift signals a broader pro-crypto stance by the US government, aiming to foster industry growth while safeguarding consumer interests.

US Treasury repeals controversial crypto tax broker rule, easing regulatory pressure on DeFi and signaling stronger support for the crypto industry and consumer protection.

US Treasury’s Repeal of Crypto Broker Rule Marks a Shift in Tax Reporting Policies

In a decisive move, the US Treasury has repealed the IRS’s crypto broker rule TD 10021, RIN 1545-BR39, which would have mandated crypto vendors to report detailed transaction data akin to traditional brokers. This rule, initially slated to take effect in 2027, faced widespread criticism for imposing onerous compliance requirements on decentralized finance platforms and other crypto service providers.

The repeal reflects a strategic pivot by the Treasury towards a more balanced regulatory framework that supports innovation while maintaining tax compliance. By removing the broker designation from crypto vendors, the Treasury is effectively reducing the regulatory overhead that could have stifled growth within the US crypto ecosystem.

Implications for DeFi and Self-Custody Users

The broker rule’s repeal is particularly significant for the DeFi sector, which relies heavily on peer-to-peer transactions and smart contract protocols that do not fit neatly into traditional financial regulatory models. Under the repealed rule, DeFi platforms would have faced substantial reporting obligations, potentially undermining their decentralized nature.

Moreover, the Treasury’s clarification that the rule would not apply to code or self-custody solutions reassures users that their privacy and autonomy remain protected. As highlighted by industry experts, blockchain’s inherent transparency already provides a robust audit trail, reducing the need for additional reporting mandates on decentralized transactions.

Broader Regulatory Context and Industry Response

This repeal is part of a broader trend of regulatory recalibration in the US crypto space. Following the removal of sanctions on Tornado Cash and easing of Federal Reserve restrictions, the Treasury’s action underscores a growing recognition of the importance of fostering a competitive and consumer-friendly crypto market.

Industry leaders have welcomed the repeal, emphasizing that it preserves the fundamental freedoms associated with self-custody and peer-to-peer transactions. Simon Dixon, a prominent crypto advocate, tweeted that Bitcoin held in self-custody remains “safe for now,” highlighting the absence of KYC requirements on code and the prevention of an IRS dragnet on decentralized transactions.

Future Outlook for Crypto Tax Regulation in the US

While the repeal removes a significant regulatory hurdle, it does not eliminate the need for clear and effective tax compliance mechanisms within the crypto industry. The Treasury’s approach suggests a preference for targeted regulations that do not hinder innovation or user privacy.

Moving forward, stakeholders can expect continued dialogue between regulators and industry participants to develop frameworks that balance transparency, consumer protection, and technological advancement. This evolving landscape offers opportunities for the US to maintain its leadership in the global crypto economy.

Conclusion

The US Treasury’s repeal of the crypto broker rule TD 10021 represents a pivotal moment for crypto regulation, easing burdens on DeFi and reaffirming support for self-custody and decentralized transactions. This policy reversal aligns with a broader pro-crypto regulatory environment aimed at fostering innovation while protecting consumers. As the industry adapts, ongoing collaboration between regulators and market participants will be essential to crafting balanced, effective tax policies that sustain growth and trust in the crypto ecosystem.