In a surprising twist that might have you raising an eyebrow, two key players in the IRS’s digital asset division, Seth Wilks and Raj Mukherjee, have decided to pack up and leave just over a year after stepping into their roles. Their departure in May 2025 coincides eerily with a time of chaos in crypto reporting rules. Talk about dramatic timing. No one’s quite sure what’s behind their exit—no statements on Dogecoin or any crackdowns—but it’s leaving a leadership vacuum at a critical juncture.
April 2025 saw President Trump signing legislation that effectively rolled back IRS DeFi reporting rules. The Biden-era mandate requiring DeFi platforms to report user transactions by 2026? Gone. Just like that. The repeal, which had bipartisan support, is projected to cost over $4 billion in tax revenue over the next decade. Wow. Talk about a win for crypto advocates who argued that DeFi is a wild frontier incompatible with old-school broker definitions. Additionally, the repeal means that DeFi brokers are now exempt from Form 1099-DA reporting requirements.
President Trump’s recent legislation has thrown DeFi reporting rules into disarray, costing billions in potential tax revenue.
In January 2025, the IRS had announced interim relief for crypto tax reporting, allowing taxpayers to use various accounting methods throughout the year. This temporary relief centers on the identification of digital units sold, easing the burden of tax reporting requirements for taxpayers navigating compliance challenges. However, cryptocurrency investments are still subject to complex regulations, and with the dramatic political landscape, who knows how long that relief will last? High-frequency traders are scratching their heads over compliance hurdles, and privacy coins? Good luck with that.
The irony? The IRS was finally getting a handle on crypto tax policy, only to have it yanked away. Now, with Trump’s pro-crypto stance, the GOP has fast-tracked repeal, leaving the Biden administration’s regulations in the dust. The uncertainty is palpable. The tax gap on crypto trades is eye-watering, and lost revenues could hit hard, impacting infrastructure and healthcare funding.
As the crypto world holds its breath, the fear of a politicized tax crackdown stirs. With leadership changes and rolling back regulations, the future of crypto tax compliance hangs in the balance. Who will step up next?
