🪙 The Future of Decentralized Finance (DeFi) in the Context of New IRS Regulations
✅ Recent regulations from the Internal Revenue Service (IRS) regarding front-end transactions in the decentralized finance (DeFi) sector have sparked significant controversy within the crypto community. Accordingly, DeFi applications will be classified as brokerages if they engage in these transactions. This regulation has attracted particular attention from industry experts, including Alex Thorn, head of research at Galaxy Digital, who outlined three viable options for DeFi applications if these regulations persist.
🚀 Three Options for DeFi
✅ Comply with IRS regulations: DeFi applications may choose to adopt IRS reporting requirements, becoming officially recognized brokerages. This could lead to the need for them to develop complex compliance and reporting mechanisms, which would not only increase operational costs but could also diminish the appeal of DeFi products to users.
✅ Block users from the United States: Another option is for DeFi services to seek to prevent users from the U.S. from accessing their platforms. Although this is a temporary solution, it may harm growth opportunities and potential development in a large market like the U.S.
✅ Abandon upgrades and revenue generation: DeFi may decide not to implement smart contract upgrades or cease developing revenue-generating forms.
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