Congress Kills the DeFi Broker Rule: What Survives for 1099-DA Reporting

Two rules, one of them now void

Two distinct sets of digital-asset broker regulations were on the books entering 2025, and only one of them is gone.

The first — the one that survived — is the custodial broker rule, finalized as Treasury Decision 10000 and published in the Federal Register on July 9, 2024. It requires custodial brokers — centralized exchanges, certain hosted-wallet providers, digital-asset payment processors, and similar businesses that take possession of customers' assets — to report digital-asset sales on a new information return, Form 1099-DA, "Digital Asset Proceeds From Broker Transactions." Gross-proceeds reporting applies to sales effected on or after January 1, 2025, with the first forms due in early 2026; cost-basis reporting phases in for sales on or after January 1, 2026.

The second — the one Congress just killed — is the DeFi broker rule, Treasury Decision 10021, published December 30, 2024. It went further than the custodial rule by reaching non-custodial actors: it expanded the definition of a digital-asset "broker" to include "trading front-end service providers," meaning the user-facing interfaces of decentralized-finance protocols. Under that rule, a DeFi front end that never holds a customer's assets, and often cannot identify the customer at all, would nonetheless have been required to collect customer information and file Form 1099-DA, with reporting scheduled to begin for transactions in 2027.

That second rule is now void.

How the repeal happened

The vehicle was the Congressional Review Act (5 U.S.C. ch. 8), the mechanism Congress uses to overturn recently issued agency rules by joint resolution. The House passed H.J. Res. 25 on March 11, 2025; the Senate passed it on March 26; and the President signed it on April 10, 2025, enacting it as Public Law 119-5. It was the first cryptocurrency-related measure signed into federal law.

The Congressional Review Act does more than erase the rule. Under its terms, once a rule is disapproved, the agency may not reissue it "in substantially the same form," and may not issue a new rule that is substantially the same, unless specifically authorized by a later statute. For DeFi front ends, that is the durable part of the outcome: Treasury cannot simply redraft and re-propose the same broker treatment. Reaching non-custodial actors again would require Congress to act first.

What this changes — and what it does not

The framing that matters for anyone with digital-asset exposure is precise, because the repeal is easy to over-read.

For decentralized-finance front ends and the people who use them, the broker obligation is gone, and gone in a way that is difficult to revive. The scheduled 2027 reporting for DeFi front ends will not occur. That is a genuine reduction in compliance reach.

For everyone transacting on custodial platforms, nothing changed. The custodial 1099-DA regime is alive and operating on its original timeline. Centralized exchanges are required to report gross proceeds from digital-asset sales effected on or after January 1, 2025, and investors will begin receiving Form 1099-DA in early 2026 covering this year's activity. Basis reporting is coming for 2026 sales. The repeal of the DeFi rule did not pause, narrow, or delay any of this.

This distinction has a practical consequence that is worth stating plainly. An investor who reads "Congress killed the crypto broker rule" and concludes that digital-asset sales are no longer reported to the IRS has drawn exactly the wrong inference for the most common case. Most retail digital-asset activity runs through custodial platforms — and those platforms are now firmly inside the reporting regime for 2025 transactions.

The recordkeeping point that does not change

The arrival of third-party reporting always shifts the burden of proof, and Form 1099-DA is no exception. Beginning with 2025 sales, the IRS will receive gross-proceeds information from custodial brokers. For 2025, that reporting captures proceeds but not, in most cases, cost basis. The taxpayer remains responsible for establishing basis — what was paid for the asset, when, and after what intervening transfers.

This is where positions are won or lost. A 1099-DA reporting a large gross-proceeds figure with no offsetting basis is a starting point for IRS matching, not a final tax answer. Taxpayers who have moved assets between wallets and platforms, participated in forks or airdrops, or acquired assets over several years across multiple venues should expect basis substantiation to become the live issue once 1099-DA matching begins. The defensible response is contemporaneous records — acquisition dates, costs, and transfer history — assembled before a notice arrives, not reconstructed after one does.

Key takeaways

• H.J. Res. 25, signed April 10, 2025 (Pub. L. 119-5), used the Congressional Review Act to nullify the DeFi broker rule (T.D. 10021) that would have treated decentralized-finance front ends as brokers.
• Under the Congressional Review Act, Treasury cannot reissue a substantially similar DeFi broker rule without new authorization from Congress.
• The earlier custodial broker rule (T.D. 10000, July 2024) was not repealed. Custodial brokers must report gross proceeds on Form 1099-DA for sales effected on or after January 1, 2025, with basis reporting phasing in for 2026.
• For most retail investors, who transact on custodial platforms, digital-asset reporting is now firmly in effect for 2025 — the opposite of "reporting is gone."

Frequently asked questions

Does this mean my crypto sales won't be reported to the IRS?

For most people, no — the opposite is true. If you trade on a centralized or custodial platform, that platform must report your 2025 gross proceeds on Form 1099-DA, with the first forms due in early 2026. Only the rule reaching decentralized-finance front ends was repealed.

Will I receive a Form 1099-DA?

If you sold or exchanged digital assets on a custodial broker during 2025, you should expect a Form 1099-DA reporting gross proceeds in early 2026. Basis information is generally not included for 2025 sales, so retaining your own cost records matters.

Can the IRS bring back the DeFi rule later?

Not on its own. Because the rule was overturned under the Congressional Review Act, Treasury may not reissue a substantially similar rule unless Congress specifically authorizes it by statute.

Bottom line

The repeal of the DeFi broker rule is a clean win for decentralized-finance front ends and a non-event for everyone trading on custodial platforms. The 1099-DA era began on schedule for 2025 custodial sales. For most digital-asset holders, the correct response to this news is not relief — it is making sure cost-basis records are in order before reporting and matching begin.