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Analysis: Three potential options to deal with the U.S. IRS broker rules are DeFi applications without a front end, non-upgradable contracts, or no-fee contracts

Analysis: Three potential options to deal with the U.S. IRS broker rules are DeFi applications without a front end, non-upgradable contracts, or no-fee contracts

Bitget2024/12/29 01:31

Recently, the U.S. Internal Revenue Service (IRS) has classified DeFi front-ends as brokers in its reporting rules, causing a shock to the crypto industry. It is reported that after proposing this rule, the U.S. Treasury Department and IRS received over 44,000 comments.

Alex Thorn, Director of Research at Galaxy Digital outlined three potential options for DeFi if the IRS rules are not revoked. He stated that DeFi services and applications could comply with IRS reporting requirements and accept broker designation; attempt to block users from the United States; or abandon smart contract upgrades and revenue generation. Thorn wrote: "Under this proposal, DeFi applications without frontend websites, owning non-upgradable contracts or not charging any 'consideration' (i.e., no fees) during digital asset disposal 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." (Cointelegraph)

Previously it was reported that The US Treasury Department along with IRS finalized tax filing requirements for specific cryptocurrency brokers (RIN 1545-BR39, TD 10021).

Subsequently, The Blockchain Association announced on platform X that it had jointly filed a lawsuit with DeFi Education Fund and Texas Blockchain Council challenging the broker rules of the U.S. Internal Revenue Service.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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