Aiying wants to discuss today the historical inevitability of the introduction of new DeFi tax regulations from several dimensions, as well as how industry practitioners should make strategic choices.

Article Author, Source: Aiying Compliance

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 DeFi front-end service providers in the definition of 'broker.' These service providers, including any platforms that directly interact with users (such as the front-end interface of Uniswap), are required to collect user transaction data starting in 2026 and submit information to the IRS via Form 1099 in 2027, including users' total 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 criticisms of Bitcoin, calling it a 'scam based on air,' to later attempts through NFT projects and launching the DeFi project WorldLibertyFinancial (WLF), he even boldly proposed including Bitcoin in the national strategic reserves (from successful historical strategic acquisitions in the U.S. to visionary proposals for Bitcoin reserves: 'The 2025 Bitcoin Strategic Reserve Draft'). His actions reflect the drive of personal interests and also 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 'broker,' given that the old regulatory policies cannot be rigidly applied to crypto projects, it may also be overturned. However, Aiying would like to discuss today the historical inevitability of the new regulations from several dimensions, as well as how industry practitioners should make strategic choices.

Part One: The Logical Evolution from Traditional Colonialism to New Financial Colonialism

1.1 The Resource Logic of Traditional Colonialism

The core of traditional colonialism lies in resource plunder achieved through military force and territorial possession. The British 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 control.

1.2 The Modern Model of Financial Colonialism

Modern colonialism centers on economic rules, achieving wealth transfer through capital flows and tax control. The U.S. Foreign Account Tax Compliance Act (FATCA) is an important embodiment of this logic, requiring global financial institutions to disclose information on U.S. citizens' assets, forcing other countries to participate in U.S. tax governance. The new DeFi tax regulations are a continuation of this model in the digital asset realm, focusing on using technology and rules to enforce global capital transparency, enabling the U.S. to obtain more tax revenue while strengthening its control over the global economy.

Part Two: America's New Colonial Tools

2.1 Tax Rules: From FATCA to New DeFi Regulations

Tax rules are the foundation of the new U.S. colonial model. FATCA mandates global financial institutions to disclose U.S. citizens' asset information, setting a precedent for weaponizing taxes. 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 these rules, 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-denominated stablecoins account for over 95%, with the underlying anchoring assets primarily being U.S. Treasuries and dollar reserves. Dollar stablecoins represented by USDT and USDC, through their applications in the global payment system, not only solidify the dollar's global status but also lock more international capital into the U.S. financial system. This is a new form of dollar hegemony in the digital economy era.

2.3 The Attractiveness of Financial Products: Bitcoin ETFs and Trust Products

Bitcoin ETFs and trust products launched by Wall Street giants like BlackRock have attracted a large inflow of international capital into the U.S. market through legalization and institutionalization. These financial products not only provide greater execution space for U.S. tax rules but also further incorporate global investors into the U.S. economic ecosystem. The current market scale is $100 billion.

2.4 Tokenization of Real Assets (RWA)

The tokenization of real assets is becoming an important trend in the DeFi space. According to Aiying, the scale of U.S. Treasury tokenization has reached $4 billion. This model enhances the liquidity of traditional assets through blockchain technology, while also creating new dominance for the U.S. in global capital markets. By controlling the RWA ecosystem, the U.S. can further promote the globalization of Treasury circulation.

Part Three: Economy and Finance—Deficit Pressure and Tax Fairness

3.1 The U.S. Deficit Crisis and Tax Gaps

The U.S. federal deficit has never been as concerning as it is now. In fiscal year 2023, the deficit approached $1.7 trillion, exacerbated by pandemic-related fiscal stimulus and infrastructure investment. Meanwhile, the global market capitalization of cryptocurrencies once exceeded $3 trillion, yet most of it remains outside the tax system. This is clearly intolerable for a modern nation that relies on tax revenue.

Taxation is the cornerstone of national power. Historically, the U.S. has always sought to expand its tax base under deficit pressure. The hedge fund regulatory reforms of the 1980s are a prime example, filling fiscal gaps by expanding 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 dollar's dominance in the global payment system. Stablecoins, while extensions of the dollar, create a parallel 'private currency' system by anchoring to the dollar, bypassing 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 uphold the dollar's hegemonic position.

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 for 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. However, if the U.S. market share is not high, a complete exit becomes a viable option.

4.2 Three Major Response Strategies

Partial Compliance: A Compromised Path

  • Establish a U.S. subsidiary (such as Uniswap.US) focused on meeting the compliance needs of U.S. users.

  • Decouple the protocol from the front end, reducing legal risks through DAO or other community management methods.

  • Introduce KYC mechanisms to report necessary information only for U.S. users.

Complete Exit: Focusing on Global Markets

  • Implement geographical blocking to restrict U.S. users' access through IP.

  • Concentrate resources on more crypto-friendly markets in the Asia-Pacific, Middle East, and Europe.

Complete Decentralization: Adhering to Technology and Principles

  • Abandon front-end services and completely shift the platform to protocol autonomy.

  • Develop trustless compliance tools (such as on-chain tax reporting systems) to technically bypass regulation.

Part Five: Deeper Reflections—The Future Game of Regulation and Freedom

5.1 The Evolution of Legislation and Long-term Trends

In the short term, the industry may delay the implementation of the rules through litigation. However, in the long term, the trend towards compliance is difficult to reverse. Regulation will drive the DeFi industry to form a polarization: one end being fully compliant large platforms, and the other end being small, decentralized projects that choose to operate secretly.

The U.S. may also adjust its policies under global competitive pressure. If other countries (such as Singapore and the UAE) adopt more lenient regulations towards 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 has no endpoint. Perhaps the future of the crypto industry will exist in a form of 'compliant decentralization': where technological innovation coexists with regulatory compromise, and privacy protection alternates with transparency.

Aiying's Conclusion: Historical Inevitability and Industry Choices

This legislation is not an isolated event but a necessary outcome of the development of U.S. political, economic, and cultural logic. For the DeFi industry, this is both a challenge and an opportunity for transformation. At this historical juncture, how to balance compliance with innovation, protect freedom while bearing responsibility, is a question every practitioner must answer.

The future of the crypto industry depends not only on technological advancement but also on how it finds its place between freedom and regulation.