According to Deep Tide TechFlow, on December 29, Galaxy Digital's research director Alex Thorn stated that if the IRS's classification of DeFi front-ends as 'brokers' is not revoked, the DeFi industry will face three options: comply with the IRS reporting requirements and accept the broker designation, attempt to block users from the U.S., or abandon smart contract upgrades and revenue generation.
Alex Thorn stated: "According to this proposal, DeFi applications that have no front-end website, possess non-upgradable contracts, and do not charge any 'consideration' (i.e., do not charge any fees) during the disposal of digital assets can be exempted from being designated as 'brokers.' In other words, highly decentralized applications cannot understand the situation and therefore cannot comply with broker reporting requirements."
Previously reported, the IRS classified DeFi front-ends as brokers and will begin taxing DeFi in 2027.