President Trump signed legislation on April 10, 2025, that nullified the digital asset reporting obligations imposed on decentralized finance (DeFi) brokers under Section 80603 of the Infrastructure Investment and Jobs Act (IIJA) (Public Law No. 119-5). The legislation, nullifying the regulations, passed with bipartisan support in both chambers of Congress.
In general, the repeal applies to decentralized finance (DeFi) brokers that operate almost entirely on blockchain infrastructure and do not provide traditional on or off ramps from fiat currency to digital assets. These entities will not be subject to the Form 1099-DA reporting requirements and not be required to collect Know Your Customer (KYC) information and report transaction data to the IRS.
Centralized exchanges that custody digital assets for their customers and offer customers the ability to move from fiat currency to digital assets remain subject to information reporting obligations under IIJA Section 80603. These exchanges will begin issuing Form 1099-DA to users in 2026 for transactions occurring on or after Jan. 1, 2025. Many exchanges have implemented or expanded KYC procedures in anticipation of full enforcement by 2027, while others have geofenced U.S. users. Information reporting obligations also remain in effect for digital asset payment processors and entities that regularly issue and redeem their tokens.
The repeal of the DeFi reporting regulations was largely driven by concerns that the rules would stifle innovation and impose compliance burdens that were impractical for permissionless blockchain protocols, but the repeal does not affect the IRS’s broader enforcement priorities. Taxpayers remain responsible for accurately reporting digital asset gains and losses. Also unchanged is the IRS’s position against “universal wallet” accounting, as outlined in Revenue Procedure 2024-28. RSM US discusses that revenue procedure in this article: The end of universal wallet accounting; Rev. Proc. 2024-28 safe harbor relief.
Even with the repeal of the latest IIJA Section 80603 reporting rules, brokers and platforms should consider taking steps to support user compliance and reduce operational risk. These may include:
Given the volume and complexity of transactions, accurate recordkeeping remains essential even for the most casual of investors. While the repeal reduces information reporting to the IRS, it does not eliminate the risk of underreporting or audit exposure, as most of this activity remains visible on public blockchains. Taxpayers are advised to maintain detailed records and use tools that support proper basis tracking and transaction reporting.
The digital asset space remains under scrutiny, and compliance expectations are evolving. At RSM US, our digital asset tax professionals are closely monitoring these developments. If you have questions or need help preparing your digital asset reporting strategy, we’re here to support you.
