DeFi Broker Reporting Repeal 2026: What the End of the IRS DeFi Rule Means for Crypto Users

Last Updated: September 8, 2026
By the Kurums.com Finance Desk

What Happened to the DeFi Broker Reporting Rule in 2026?

The DeFi broker reporting rule, finalized by the Treasury in late 2024, would have required decentralized finance front-end platforms to collect user data and report transactions to the IRS the same way centralized exchanges do; Congress repealed it using the Congressional Review Act, and the repeal was signed into law on April 10, 2025.

The repeal came through H.J.Res.25, a joint resolution that used the Congressional Review Act to overturn the regulation before it took effect. Because the Congressional Review Act also bars an agency from issuing a substantially similar rule without new statutory authority, Treasury cannot simply reissue the same DeFi broker rule on its own; any future version would need new legislation from Congress.

Key Takeaways on the DeFi Reporting Repeal

Do DeFi platforms have to report my transactions to the IRS in 2026? No — the rule that would have required this was repealed in 2025 and remains repealed through 2026, so non-custodial DeFi front ends are not subject to the same broker reporting duties as centralized exchanges.

Does this mean DeFi gains are tax-free? No — the repeal removes a third-party reporting requirement on the platform, not the taxpayer’s underlying obligation to report and pay tax on gains from trading, swapping, or earning yield through DeFi protocols.

Are centralized exchanges still required to report to the IRS? Yes — covered brokers, including most centralized exchanges, must report crypto sales using the new Form 1099-DA starting with 2025 transactions filed during the 2026 tax season.

Is cost-basis tracking easier now for DeFi users? No — without broker-issued 1099-DA forms, DeFi users bear full responsibility for tracking their own cost basis across wallets and protocols, which is harder without the standardized reporting that centralized exchange users now receive.

Why Was the DeFi Broker Rule Repealed?

Congress and industry groups argued the rule’s definition of “broker” was too broad, potentially sweeping in software developers and non-custodial protocol interfaces that never take control of user funds and therefore cannot collect the identifying information a real broker report requires.

Unlike a centralized exchange, a decentralized exchange’s front end is often just interface code pointing to a smart contract; the platform operator may never hold a user’s private keys, know their identity, or have a mechanism to collect a tax ID. Critics of the original rule said complying would have been technically impossible for genuinely decentralized protocols and would have pushed development offshore or underground rather than improving compliance. That argument won enough support in Congress to pass the repeal through both chambers, and the White House signed it in April 2025.

What Reporting Rules Still Apply to Centralized Crypto Exchanges in 2026?

Centralized exchanges and other covered digital asset brokers must report user crypto sales to the IRS using Form 1099-DA starting with transactions from the 2025 tax year, filed during the 2026 filing season, and must report standardized cost-basis information for transactions occurring on or after January 1, 2026.

This is a significant change from prior years, when most exchanges issued only informal transaction histories or a basic 1099-K, leaving taxpayers to calculate gains and cost basis themselves. Form 1099-DA brings crypto reporting closer to how brokers already report stock and bond sales, which means the IRS will, for the first time, receive systematic third-party data on centralized crypto transactions at scale — making mismatches between what a taxpayer reports and what an exchange reports far easier for the agency to flag automatically.

What Is the Wallet-Level Cost Basis Problem and How Does It Affect DeFi Users?

Wallet-level cost basis tracking means a taxpayer must document what they originally paid for an asset separately for each wallet or platform it has touched, because moving crypto between wallets does not automatically carry the original cost-basis information with it.

For a centralized exchange user, the exchange’s own records combined with the new 1099-DA largely solve this problem going forward. For a DeFi user who routinely bridges assets across chains, deposits into liquidity pools, or moves funds between a hardware wallet and several protocol interfaces, no single platform sees the whole picture, and none of them are required to report it to the IRS after the repeal. That leaves the taxpayer solely responsible for reconstructing an accurate cost basis across every hop — a task that becomes materially harder the more protocols and chains are involved, and one where reasonable-cause penalty relief is far less likely to succeed if records were never kept in real time.

How Do International Rules Like CARF Compare to the US DeFi Repeal?

Unlike the US repeal, the OECD’s Crypto-Asset Reporting Framework (CARF) still requires crypto-asset service providers — including many exchanges and certain wallet providers — in participating countries to begin collecting user transaction data in 2026, with the first cross-border information exchanges between tax authorities expected in 2027.

This creates a meaningful gap between US and international treatment: a US-based DeFi user interacting only with non-custodial protocols currently faces no domestic broker-reporting requirement, but a user in a CARF-participating jurisdiction who touches a covered service provider may still have their activity reported internationally. Businesses and individuals operating across borders should not assume the US repeal reflects the global regulatory direction — most other major markets are moving toward more crypto reporting, not less.

What Should Crypto Users and Businesses Do Given the DeFi Reporting Gap?

Crypto users active in DeFi should keep transaction-level records themselves since no platform is required to do it for them, businesses accepting crypto should confirm which of their exchange partners are covered brokers issuing 1099-DA, and anyone with cross-border crypto activity should check whether a CARF-participating country’s rules apply regardless of the US repeal.

Three concrete steps follow from where the rules stand in 2026: first, maintain a running, wallet-by-wallet cost-basis log for any DeFi activity, ideally using crypto tax software that can trace transfers across chains, rather than trying to reconstruct it at filing time. Second, cross-check any centralized exchange 1099-DA you receive against your own records before filing, since this is the first year the IRS will have that data to compare against your return automatically. Third, do not assume DeFi activity is invisible to tax authorities simply because the US broker rule was repealed — blockchain transactions remain public and traceable, and international frameworks like CARF are expanding reporting even as the US rule narrows.

For the broader 2026 compliance landscape, including how CARF, DAC8, and Form 1099-DA fit together, see Kurums.com’s guide to crypto tax reporting rules in 2026. For practical record-keeping steps that apply directly to the wallet-level cost basis problem described above, see Crypto Tax Record-Keeping and Reporting. Readers looking for legal ways to reduce a crypto tax bill within these rules can also review How to Reduce Your Crypto Taxes Legally. For the full range of digital-asset guides, visit the Kurums.com Crypto Finance hub.

Frequently Asked Questions About the DeFi Broker Reporting Repeal

Is DeFi trading tax-free in the United States now?
No — the repeal only removed a reporting requirement on DeFi platforms; individual taxpayers still owe tax on gains from DeFi trading, swaps, and yield, and are still required to report them.

What is Form 1099-DA and does it apply to DeFi?
Form 1099-DA is the new IRS form covered digital asset brokers use to report crypto sales; it generally applies to centralized, custodial platforms and not to non-custodial DeFi front ends after the 2025 repeal.

Could the DeFi broker rule come back?
The Congressional Review Act bars Treasury from reissuing a substantially similar rule on its own, so any future DeFi broker reporting requirement would need new legislation from Congress rather than a new regulation.

Does CARF apply to US taxpayers?
CARF applies through participating countries’ own crypto-asset service providers; a US taxpayer using a provider based in or operating within a CARF-participating jurisdiction may still have activity reported internationally even though the US domestic DeFi broker rule was repealed.

What happens if I don’t track my DeFi cost basis and get audited?
Without documented cost basis, the IRS can treat the full proceeds of a sale as taxable gain, so failing to track wallet-level cost basis in DeFi can result in a significantly larger tax bill than the transaction actually generated in real profit.

Sources

• PwC — Global Crypto Tax Developments in 2026
• IE Tax Attorney — Crypto Tax Reporting 2026: New Form 1099-DA
• MetaMask — US Crypto Tax Reporting in 2026: What You Need to Know
• BYDFi — Crypto Tax Reporting 2026: New IRS Rules Explained
• Cointelegraph — Crypto Policy & Regulation News