The U.S. Internal Revenue Service (IRS) has finalized new tax reporting rules for digital asset transactions. The regulations require all digital asset brokers, including decentralized finance (DeFi) platforms, to report their clients’ transactions. The new rules will go into effect on January 1, 2027, and brokers will be required to begin collecting data in 2026.
The IRS says the move aims to increase tax compliance and prevent digital assets from being used for tax evasion. Specifically, DeFi platforms are planned to be subject to the same reporting obligations as traditional financial intermediaries. The IRS argues that these regulations do not discriminate against the DeFi sector and are consistent with existing brokerage regulations.
However, there is also criticism of these regulations in the crypto community. For example, prominent attorney John Deaton says these rules undermine the core principles of DeFi: decentralization and user privacy. Deaton argues that the new Congress should reverse these rules.
The IRS estimates that these regulations will affect approximately 650 to 875 DeFi brokers and potentially 2.6 million taxpayers. The move is expected to promote tax compliance by increasing the transparency of digital asset transactions.
Ultimately, the IRS’ new regulations aim to provide greater transparency and tax compliance in the digital asset market. However, the impact of this move on the DeFi ecosystem and the changes it will create in the industry are among the issues to be closely monitored in the coming period.
Source:
• “IRS to tax DeFi as crypto reporting rules are finalized.” FinanceFeeds, December 27, 2024.
• “Prominent Lawyer Criticizes New Cryptocurrency Tax Rule.” COINTURK, December 27, 2024.
