The world of crypto taxes just got a bit of a breather, and crypto enthusiasts are buzzing. The IRS has decided to delay some controversial rules, and taxpayers couldn’t be happier. Let’s break down what’s happening, why it matters, and what it means for crypto fans.

IRS Rethinks FIFO Rule

The IRS planned to enforce a strict FIFO rule for crypto transactions starting in 2024. FIFO, short for “First In, First Out,” calculates taxes based on the oldest assets sold first. Sounds simple, right? Not so much. For many, it could mean higher taxes during bull markets. Imagine selling your oldest Bitcoin from years ago—it likely has the lowest cost basis, which means bigger gains and bigger taxes.

Thankfully, the IRS hit pause. The new deadline? December 31, 2025. This gives taxpayers time to choose methods like HIFO (Highest In, First Out) or Specific ID, which can save money. It also lets brokers upgrade systems to handle these options. Crypto taxpayers can breathe easier, for now.

IRS Faces Pushback from DeFi Fans

Decentralized finance, or DeFi, is also under the IRS spotlight. The agency wants DeFi platforms to follow the same reporting rules as centralized exchanges. That means tracking transactions, disclosing gross proceeds, and reporting on global users. Uniswap and other DeFi advocates aren’t thrilled.

Uniswap’s legal head called the IRS rule unfair and ripe for challenge. Critics argue that DeFi platforms aren’t brokers in the traditional sense. Compliance with these rules would demand costly tech upgrades, especially since decentralized platforms don’t have centralized control. Many hope Congress will step in and overturn the rule before it takes full effect in 2027.

More Time for Taxpayers

This delay isn’t just good news for DeFi platforms. It’s a win for all crypto taxpayers. With the temporary relief, investors can track their own records and choose smarter accounting methods. Cointracker’s Shehan Chandrasekera said the immediate rollout of FIFO could have been “disastrous” during bull runs. Now, taxpayers have a chance to prepare and minimize their taxes.

Mark Thomas, a crypto commentator, explained that FIFO isn’t always bad. If you sell assets held for over a year, FIFO could mean lower long-term capital gains taxes. But for most, having options like HIFO means better tax outcomes.

Lawsuits Take Aim at the IRS

The IRS’s crypto rules are facing legal challenges from blockchain groups and industry leaders. Critics argue that forcing brokers to report digital asset transactions violates constitutional rights. They also say it’s unfair to hold decentralized exchanges to the same standards as centralized platforms.

Bill Hughes, a lawyer at blockchain firm Consensys, called the ruling “all cost, no benefit” from a revenue perspective. He pointed out that the new rules require front-end platforms to track and report on both U.S. and global users, covering all digital assets, including NFTs and stablecoins. Hughes argued this creates enormous burdens for decentralized platforms that lack centralized control.

Hughes also noted that the outgoing administration’s approach is deliberate, stating, “The fight continues.” Many in the industry are optimistic that Congress will review and reject the rule before it fully takes effect in 2027. For now, the lawsuits highlight the growing tension between the crypto world and regulators.

Looking Ahead

For now, the IRS delays bring relief to crypto taxpayers and brokers. But the fight isn’t over. Lawsuits and Congressional reviews could change everything. In the meantime, taxpayers should stay on top of their records, explore tax-saving strategies, and watch for updates.

Crypto taxes might not be fun, but at least the IRS is giving everyone more time to figure it all out.