Recently, the IRS's reporting rules classified DeFi front ends as brokers, which has had a significant impact on the cryptocurrency industry. It is reported that the U.S. Treasury and the IRS received over 44,000 comments after proposing these rules.
Galaxy Digital Research Director Alex Thorn outlined three potential options for DeFi if the IRS rules are not revoked. He stated that DeFi services and applications could comply with the IRS reporting requirements and accept broker designations, attempt to block users from the U.S., or abandon smart contract upgrades and revenue generation. Thorn wrote, "According to the proposal, DeFi applications with no front-end website, that have non-upgradable contracts, and do not charge any 'consideration' (i.e., do not charge any fees) during the disposal of digital assets can be exempt from being designated as 'brokers.' In other words, highly decentralized applications cannot understand the situation and thus cannot comply with broker reporting requirements." (Cointelegraph)
Previously, it was reported that the U.S. Treasury and the IRS finalized tax reporting requirements for specific cryptocurrency brokers (RIN 1545-BR39, TD 10021).
Subsequently, the U.S. Blockchain Association announced on the X platform that it has filed a lawsuit with the DeFi Education Fund and the Texas Blockchain Council, challenging the IRS's broker rules.