The US Internal Revenue Service said that DeFi brokers should comply with long-standing securities rules, contradicting the industry’s opinion that has advocated for different laws for digital assets.
Updated rules from the IRS released on December 27 would direct some “DeFi brokers” to act like traditional financial institutions by collecting certain user activity data and reporting cryptocurrency earnings.
The final rules apply to “front-end” DeFi operators and refer to service providers that directly manage websites used to access Web3 platforms such as decentralized exchanges for US and non-US participants.
So-called DeFi brokers would also have to report all digital assets, including NFTs and stablecoins. Aviva Aron-Dine, assistant secretary of state for tax policy, said the revised framework would create a level playing field for taxpayers and standardize reporting requirements for all participants.
Crypto industry incumbents, on the other hand, have debated that digital assets fall within the scope of existing securities laws, emphasizing that the industry needs different rules. The IRS completely contradicted this claim in a joint statement with the Treasury Department.
The Treasury Department and the IRS disagree that DeFi participants should be excluded from Section 6045 information reporting requirements due to a lack of experience in the financial services sector or a perceived lack of comprehensive regulatory oversight. Persons with technology skills who conduct trades or businesses related to financial services should comply with the same rules as all other persons who operate financial services.
