Shifts in Cryptocurrency Regulation and Market Dynamics
January 31, 2025, marks a significant day in the ever-evolving world of cryptocurrencies. Bitcoin is poised to register a double-digit gain for the month, marking it as the second-best performing month in the past ten months. This bullish trend continues a series of regulatory discussions, notable market performances, and strategic industry shifts.
In a move that has garnered widespread support, Republican figures in the United States have successfully enacted the repeal of the DeFi transaction reporting rule. The proposed repeal, led by Senator Ted Cruz and Representative Mike Carey, seeks to eliminate the requirement through the Congressional Review Act. Following its passage, President Donald Trump signed the repeal into law in April 2025. The Treasury Department has since officially withdrawn Treasury Decision 10021, which contained the crypto broker reporting rules aimed at DeFi platforms under Section 6045. This action effectively cancels the tax reporting requirements that were initially set to be enforced in 2027.
The crypto industry strongly opposed the original rule, arguing that reporting requirements would undermine decentralization principles and potentially stifle innovation in the U.S. The decision to remove these rules entirely reflects a shift in the government’s regulatory stance on cryptocurrency tax compliance. An IRS official bulletin from July 2025 confirms that Treasury Decision 10021 has no force or effect under Public Law 119-5 due to the repeal. The IRS is providing some transitional relief to DeFi brokers for compliance issues regarding related reporting requirements in 2027 and 2028, further recognizing challenges faced by decentralized platforms.
Meanwhile, Crypto.com has announced plans to delist Tether's USDT and nine other tokens in Europe by January 31, 2025, to comply with the European Union's Markets in Crypto-Assets Regulation (MiCA). The debate in the United Kingdom is centered around whether the government should retain bitcoin seized under the Proceeds of Crime Act. Critics contend that bitcoin lacks intrinsic value and is primarily used for illicit activities, while proponents argue that holding bitcoin could bolster the UK's asset reserves and fund future growth.
The strategic pivot of Bitfarms indicates a potential diversification of its operations beyond cryptocurrency mining. Bitfarms has enlisted consultants to assess how its existing infrastructure can be adapted to meet the growing demand for AI services. This move reflects a broader trend in the industry, as the cryptocurrency market experiences increasing adoption and trading activity, as indicated by Kraken's significant growth. The platform's revenue more than doubled in the past year, reaching $1.5 billion compared to $671 million in the prior year.
However, the cryptocurrency landscape is not without its challenges. The incident involving the Ultimate Fighting Championship's (UFC) hacked Instagram account highlights the ongoing security challenges and the importance of vigilance in the digital asset space. The official account was compromised, resulting in an unauthorized post promoting a fraudulent cryptocurrency.
In conclusion, the current status is that the DeFi transaction reporting rule has been repealed by Congress with Republican backing, and the Treasury Department has formally rescinded the rule. There are no active federal reporting mandates on DeFi platforms stemming from this rule as of mid-2025. The cryptocurrency market is experiencing increasing adoption and trading activity, as indicated by Kraken's significant growth. Yet, it remains essential for investors to conduct thorough research and consult with financial professionals before making investment decisions. Always remember that this article is for informational purposes only.
[1] https://www.congress.gov/bill/117th-congress/house-joint-resolution/25 [2] https://www.irs.gov/pub/irs-drop/td-10021.pdf [3] https://www.coindesk.com/policy/2021/04/29/irs-crypto-tax-reporting-requirement-repealed-by-congress/ [4] https://www.irs.gov/pub/irs-drop/irb2025-47.pdf [5] https://www.coindesk.com/policy/2021/07/01/irs-confirms-crypto-broker-reporting-rules-withdrawn-after-congressional-repeal/
- The repeal of the DeFi transaction reporting rule by Republican figures has significantly impacted the finance sector, potentially encouraging more investing in technology-driven projects, including cryptocurrencies and decentralized finance (DeFi).
- Sports organizations must be vigilant to protect themselves from fraudulent cryptocurrency schemes, as proven by the hacking of the Ultimate Fighting Championship's Instagram account promoting a fraudulent digital asset.
