Treasury Department Officially Withdraws Crypto Broker Reporting Requirements After Congressional Ruling

On Thursday, the US Treasury Department formally abandoned cryptocurrency broker reporting regulations, following Congressional action to overturn them through the Congressional Review Act, which President Trump endorsed in April.

The regulation, entitled “Gross Proceeds Reporting by Brokers that Regularly Provide Services Effectuating Digital Asset Sales,” was released on December 30, 2024, and aimed to mandate that specific decentralised finance sector participants submit information returns as brokers from February 28, 2025.

Through Public Law 119-5 and the Congressional Review Act, the final regulation lacks any legal authority or impact and is deemed null and void, as though it had never been implemented.

The Treasury is eliminating the regulation from the Code of Federal Regulations and returning to the prior language, which exempted entities exclusively involved in validating distributed ledger transactions or providing hardware for private key management from broker reporting obligations.

Congressional Republicans successfully contested the Biden-era regulation that would have categorised DeFi platforms as brokers, mandating extensive data gathering and reporting duties.

Treasury officials estimated that billions in cryptocurrency-related tax revenue were going uncollected each year, however industry representatives contended that the mandates were technically unfeasible for decentralised platforms to execute.

The regulation encountered substantial opposition for failing to comprehend decentralised technology and potentially forcing innovation abroad, leading to legal challenges from the Blockchain Association and Texas Blockchain Council.

Senator Ted Cruz spearheaded the Congressional Review Act resolution together with Representative Mike Carey, contending the regulation constituted government overreach that would suppress American cryptocurrency innovation.

Cruz stated the regulation “directly and immediately would harm American cryptocurrency innovation and drive development overseas.”

The Joint Committee on Taxation calculated that eliminating the regulation could cost the government approximately $4 billion in foregone tax revenue over a decade.

Despite anticipated revenue losses, legislators backing the repeal emphasised privacy, technical viability, and innovation above tax collection effectiveness.

House Financial Services Committee Chairman French Hill similarly criticised the proposal as excessive government interference, maintaining that classifying DeFi software providers as brokers would impose expensive reporting requirements on entities that never maintain custody of user assets.

The regulation risked forcing American digital asset development abroad whilst hampering technological advancement.

White House Crypto Czar David Sacks endorsed the repeal initiative, describing the regulation as an “11th-hour attack on the crypto community by the Biden administration.”

The administration positioned itself as firmly supportive of crypto industry concerns whilst establishing federal working groups on digital asset regulation.

The successful repeal blocks the IRS from implementing similar proposals going forward, representing a major triumph for DeFi supporters.

The Treasury Department additionally announced exemptions that will release banks and brokerage firms from reporting customers’ crypto holdings on financial statements, provided they demonstrate effective digital asset risk management capabilities.

The SEC commenced issuing guidance clarifying that certain crypto arrangements may not qualify as liabilities for reporting purposes.

These regulatory relief initiatives emerged following persistent Congressional pressure to revise the contentious SAB 121 accounting bulletin.

Although the Senate voted to reverse SAB 121 in May with 60 senators backing repeal, President Biden’s veto blocked the measure from becoming effective.

States continue progressing Bitcoin legislation independently of federal initiatives, with 23 states introducing Bitcoin reserve bills and 35 proposals under consideration.

In fact, following that, Kentucky Governor Andy Beshear signed the “Bitcoin Rights” bill into law.

Outside the United States, Japan’s Senate has also recently approved legal amendments that provide crypto brokerage firms enhanced operational flexibility through new “intermediary business” categories, which feature reduced regulatory obstacles.

The legislation establishes customer protections whilst encouraging innovation, requiring the Prime Minister’s approval for crypto operators to hold assets domestically.