Article source: Aiying compliance
Regulatory document: https://public-inspection.federalregister.gov/2024-30496.pdf
The U.S. Department of the Treasury and the IRS recently issued an important new regulation (RIN 1545-BR39), expanding the applicability of existing tax laws to include front-end service providers of DeFi under the definition of 'brokers.' These service providers, including any platform that interacts directly with users (such as Uniswap's front-end interface), are required to collect user transaction data starting in 2026 and submit information to the IRS via 1099 forms beginning in 2027, including total user earnings, transaction details, and taxpayer identification information.
We all know that Trump's political stage is never short of drama, and his attitude toward cryptocurrencies is no exception. From early criticism of Bitcoin as a 'scam based on air' to later attempts through NFT projects and the issuance of the DeFi project WorldLibertyFinancial (WLF), he even boldly proposed the concept of including Bitcoin in the national strategic reserve (from successful historical land acquisitions in the U.S. to a forward-looking concept of Bitcoin reserves: a draft for the strategic reserve of Bitcoin in 2025). His actions reflect the drive of personal interests and hint at the complex position of the crypto industry within the U.S. political system.
Although the new regulations will not take effect for another year or two, and there is considerable debate over the definition of 'brokers,' since the old regulatory policies cannot be rigidly applied to crypto projects, they may be overturned. However, Aiying would like to explore from several dimensions the historical inevitability of the new regulations and how industry practitioners should make strategic choices.
Part One: The Logical Evolution from Traditional Colonialism to New Financial Colonialism
1.1 Resource Logic of Traditional Colonialism
The core of traditional colonialism lies in resource plunder through military force and territorial occupation. Britain controlled the cotton and tea of India through the East India Company, while Spain plundered gold from Latin America; these are typical cases of wealth transfer achieved through direct resource occupation.
1.2 Modern Model of Financial Colonialism
Modern colonialism centers on economic rules, achieving wealth transfer through capital flows and tax control. The Foreign Account Tax Compliance Act (FATCA) is a significant manifestation of this logic, requiring global financial institutions to disclose asset information about U.S. citizens, forcing other countries to participate in U.S. tax governance. The new DeFi tax regulations continue this model in the digital asset realm, focusing on using technological means and rules to enforce global capital transparency, allowing the U.S. to obtain more tax revenue while enhancing its control over the global economy.
Part Two: The New Colonial Tools of the United States
2.1 Tax Rules: From FATCA to New DeFi Regulations
Tax rules are the foundation of the new colonial model in the U.S. FATCA mandates global financial institutions to disclose asset information about U.S. citizens, setting a precedent for the weaponization of tax. The new DeFi tax regulations further extend this logic by requiring DeFi platforms to collect and report user transaction data, expanding U.S. control over the digital economy. With the implementation of this rule, the U.S. will gain more precise data on capital flows globally, further enhancing its control over the global economy.
2.2 The Combination of Technology and the Dollar: The Dominance of Stablecoins
In the $200 billion stablecoin market, dollar-pegged stablecoins account for over 95%, with their underlying assets mainly being U.S. Treasury bonds and dollar reserves. Dollar stablecoins represented by USDT and USDC, through their application in the global payment system, not only solidify the dollar's global position but also lock more international capital within the U.S. financial system. This is a new form of dollar hegemony in the digital economy era.
2.3 The Appeal of Financial Products: Bitcoin ETFs and Trust Products
Bitcoin ETFs and trust products launched by Wall Street giants like BlackRock have attracted a large influx of international capital into the U.S. market through legalization and institutionalization. These financial products not only provide greater enforcement space for U.S. tax rules but also further integrate global investors into the U.S. economic ecosystem. The current market size is $100 billion.
2.4 Tokenization of Real-World Assets (RWA)
Tokenization of real assets is becoming an important trend in the DeFi space. According to Aiying, the tokenization of U.S. Treasury bonds has reached $4 billion. This model enhances the liquidity of traditional assets through blockchain technology while creating new dominance for the U.S. in the global capital market. By controlling the RWA ecosystem, the U.S. can further promote the global circulation of Treasury bonds.
Part Three: Economy and Finance—Deficit Pressure and Tax Equity
3.1 U.S. Deficit Crisis and Tax Loopholes
The U.S. federal deficit has never been as concerning as it is now. In FY2023, the deficit approached $1.7 trillion, exacerbated by post-pandemic fiscal stimulus and infrastructure investment. Meanwhile, the global market value of cryptocurrencies once exceeded $3 trillion, yet much of it remained outside the tax system. This is clearly unacceptable for a modern nation reliant on tax revenue.
Taxes are the cornerstone of national power. Historically, the U.S. has always sought to expand the tax base under deficit pressure. The hedge fund regulatory reforms of the 1980s serve as a paradigm of filling fiscal gaps by broadening the coverage of capital gains tax. Now, cryptocurrencies have become the latest target.
3.2 Defense of Financial Sovereignty and the Dollar
But this is not just a tax issue. The rise of DeFi and stablecoins challenges the dominance of the dollar in the global payment system. While stablecoins are an extension of the dollar, creating a parallel 'private currency' system by anchoring to the dollar, they also circumvent the control of the Federal Reserve and traditional banks. The U.S. government realizes that this decentralized form of currency could pose a long-term threat to its financial sovereignty.
Through tax regulation, the U.S. intends not only to gain fiscal benefits but also to re-establish control over capital flows and defend the dollar's hegemonic status.
Part Four: Industry Perspective—Choices and Trade-offs of Practitioners
4.1 Assessment of the Importance of the U.S. Market
As a practitioner in the DeFi space, the first step is to rationally assess the strategic value of the U.S. market to the business. If the platform's main trading volume and user base come from the U.S. market, then exiting the U.S. could mean significant losses. Conversely, if the U.S. market share is low, a complete exit becomes a feasible option.
4.2 Three Major Coping Strategies
Partial Compliance: A Compromise Path
Establish a U.S. subsidiary (e.g., Uniswap.US) focused on meeting the compliance needs of American users.
Separate the protocol from the front end to reduce legal risks through DAO or other community management methods.
Introduce a KYC mechanism to report necessary information only for U.S. users.
Complete Exit: Focus on Global Markets
Implement geographic blocking to restrict U.S. users from accessing the platform.
Concentrate resources on more crypto-friendly markets in the Asia Pacific, Middle East, and Europe.
Complete Decentralization: Adhering to Technology and Ideals
Abandon front-end services and fully transition the platform to protocol autonomy.
Develop trustless compliance tools (such as an on-chain tax reporting system) to technically bypass regulation.
Part Five: Deeper Reflections—The Future Game of Regulation and Freedom
5.1 Evolution of Legislation and Long-Term Trends
In the short term, the industry may delay the implementation of regulations through litigation. But in the long run, the trend toward compliance is difficult to reverse. Regulation will drive the DeFi industry to form a polarized landscape: one end being fully compliant large platforms, and the other being small decentralized projects that choose to operate discreetly.
The U.S. may also adjust its policies under global competitive pressure. If other countries (like Singapore and the UAE) adopt more lenient regulations for cryptocurrencies, the U.S. may relax certain restrictions to attract innovators.
5.2 Philosophical Reflections on Freedom and Control
The core of DeFi is freedom, while the core of government is control. This game does not have an endpoint. Perhaps the future cryptocurrency industry will exist in a form of 'compliant decentralization': where technological innovation coexists with regulatory compromise, and privacy protection alternates with transparency.
Aiying Conclusion: The Inevitability of History and the Choices of the Industry
This act is not an isolated event but a necessary result of the development of U.S. political, economic, and cultural logic. For the DeFi industry, this presents both a challenge and an opportunity for transformation. At this historical juncture, how to balance compliance with innovation and protect freedom while bearing responsibility is a question every practitioner must answer.
The future of the cryptocurrency industry depends not only on technological advancements but also on how it finds its place between freedom and regulation.
