In a landmark move in June 2025, Congress officially repealed the IRS’s controversial digital asset reporting requirements, specifically those demanding Know Your Customer (KYC) data collection and the issuance of Form 1099-DA by decentralized finance (DeFi) platforms. But this policy reversal isn’t just a win for anonymous users and protocol developers, it’s also a defining victory for DeFi Tax, which has long been on the front lines of this battle.
Since its inception, DeFi Tax has been more than a compliance platform, it’s been a vocal advocate for fairness, clarity, and feasibility in crypto tax regulation. DeFi Tax’s leadership has spent years engaging directly with regulators, tax professionals, and blockchain law experts, including hosting working sessions and confidential briefings with IRS officials to demonstrate the technical impossibility and philosophical absurdity of imposing traditional broker-based compliance standards on decentralized protocols.
These sessions didn’t merely present theory, they walked the IRS through actual system-level breakdowns. DeFi Tax showed how imposing Form 1099-DA requirements on smart contracts and liquidity pools would result in inaccurate reporting, double counting, and rampant data security vulnerabilities ultimately undermining both compliance and enforcement.
The withdrawal of the 1099-DA mandate is a direct reflection of those efforts. It validates what DeFi Tax and its ecosystem of experts have argued all along: that attempting to retrofit TradFi rules onto DeFi architecture is misguided and counterproductive.
DeFi Tax was never designed to play catch-up. It was built specifically to confront and solve the confusion that defines the current crypto tax environment, and the flawed legacy crypto tax tools. The repeal of the 1099-DA doesn't just vindicate DeFi Tax’s advocacy, it highlights why the platform was created in the first place.
DeFi Tax was engineered from the ground up to help Crypto users through the often confusing Crypto tax landscape, give them certainty in their reports and help them to manage a variety of scenarios which had previously never been considered including:
Independent reviews and industry commentary have repeatedly cited the platform as a “missing piece” in crypto tax infrastructure, particularly praising its ability to operate in a world where broker-based tax forms don’t, and won’t, exist. The IRS’s own documentation struggles to define how such forms would work, and now Congress agrees: it’s not just impractical, it’s wrong.
Let’s be clear: the absence of a 1099-DA does not mean the absence of tax obligations. Crypto users are still legally required to report gains, losses, and income from all DeFi activity. But now, the responsibility for accurate reporting shifts entirely to the individual. That’s where DeFi Tax shines, helping users to navigate the rather complex environment with ease. With DeFi tax users get:
The withdrawal of the 1099-DA rule is a milestone, but it’s not the end of the road. Regulators will continue exploring new frameworks. But thanks to the work of companies like DeFi Tax and its coalition of crypto-literate experts, future conversations will begin from a place of understanding, not from the outdated assumptions of a pre-Web3 era.
For users, the message is clear: you’ve won a battle, but you haven’t won exemption. Compliance is still essential, but now it’s possible to do it right, on your own terms, with the right tools and experts on-hand to assist.
DeFi Tax isn’t just built for this moment. It helped create it.