Congress Nixes the DeFi-Broker Rule—What That Means for Form 1099-DA
Congress Nixes the DeFi-Broker Rule—What That Means for Form 1099-DA
The U.S. Treasury and IRS have formally struck TD 10021 from the tax code after it was overturned under the Congressional Review Act (CRA). Congress passed H.J. Res. 25 in March; the President signed it on April 10, 2025, as Public Law 119-5. The Federal Register notice slated for publication on July 11 finalizes the repeal and restores the section 6045 regulations to the pre-TD 10021 text.
Why TD 10021 mattered
TD 10021 would have treated many decentralized-finance (DeFi) front-ends, payment processors and kiosk operators as “digital-asset middlemen.” Starting with 2027 transactions, those entities would have had to collect customer KYC data and issue the brand-new Form 1099-DA reporting gross proceeds on digital-asset sales. Industry groups argued the rule was unworkable and exceeded the IRS’s mandate; lawmakers ultimately agreed, triggering CRA disapproval.
What “going away” really means for 1099-DA
DeFi platforms – The CRA repeal wipes out the legal authority that would have forced non-custodial brokers to file Form 1099-DA. For these actors, the form is effectively dead on arrival.
Custodial exchanges – TD 10000 (issued July 9 2024) was not part of the CRA action, so Coinbase-style custodial brokers are still scheduled to begin sending 1099-DAs for 2025 trades (first statements issued in early 2026).
Future rule-making – The CRA bars Treasury from issuing a “substantially similar” DeFi-broker rule without new legislation. Congress would have to revisit the issue if policymakers want third-party reporting in the DeFi arena again.
Practical take-aways
Stakeholder | What changes | What stays |
Investors using DeFi | No automatic 1099-DA; you remain responsible for self-reporting gains & basis. IRS can still seek data through audits or John Doe summonses. | — |
DeFi front-ends / smart-contract devs | No immediate KYC build-out, backup-withholding systems, or 1099-DA mailings. | Anti-money-laundering duties (FinCEN, OFAC) remain. |
Centralized exchanges & hosted wallets | Must stay on track to issue Form 1099-DA and collect basis data under TD 10000. | Same timeline: gross-proceeds reporting on 2025 trades; basis reporting phases in 2026-27. |
Tax professionals & software | Need logic splits: 1099-DA ingestion for custodial data, manual entry/work-paper workflows for DeFi. | Ongoing push for better client education about self-reporting. |
What to watch next
Stablecoin and broader crypto bills moving through Congress could reopen the reporting debate.
State-level initiatives—several states are considering their own digital-asset information-return rules that could fill the gap.
IRS enforcement tools—expect more summonses and data-analytics audits targeting large, on-chain DeFi transactions as a workaround for the missing third-party reports.
Bottom line: The headline “1099-DA is gone” is only half-true. Congress killed the DeFi-broker mandate, sparing smart-contract front-ends from onerous reporting, but Form 1099-DA lives on for custodial exchanges. Traders should still expect to receive it for centralized-platform activity and remain diligent about tracking DeFi gains manually.
