The post The IRS Finalizes Tax Laws on DeFi and Crypto Reporting appeared on BitcoinEthereumNews.com.

The IRS has introduced DeFi platforms to the existing tax framework. New tax rules for DeFi platforms will take effect from 2027. The IRS will treat DeFi platforms facilitating transactions as brokers. The U.S. Treasury Department, through the Internal Revenue Service (IRS), has finalized regulation integrating decentralized finance (DeFi) platforms into the existing tax framework. In a recent report, the regulatory agency noted that the new rules will be implemented in 2027, allowing the platforms to organize their data for proper reporting. It is worth clarifying that the new regulation targets “trading front-end service providers,” which the IRS has classified as brokers due to their intermediary roles in facilitating digital asset transactions. The IRS believes that this classification will improve tax compliance within the growing DeFi sector. According to the IRS, the new rule classifies platforms offering digital assets sales or exchanges as brokers, regardless of whether they use smart contracts. Further, as long as these platforms exert sufficient control over transactions, they fall under the IRS’s definition of brokers, established nearly four decades ago, by which the IRS would clarify that the DefI platforms under this category would be treated as brokers. It is worth noting that the IRS’ new rule does not affect all DeFi applications. As earlier stated, it focuses on platforms that facilitate digital asset transactions for customers. However, the IRS requires the brokers to collect customers’ data from 2026 before it is implemented in 2027.  Read also: IRS’s New Crypto Tax Form: Less Privacy Concerns, More Clarity Based on the Treasury Department’s report, the IRS estimates that the new law will affect 650 to 875 DeFi brokers, covering about 2.6 million taxpayers. According to the regulator, the new rule is consistent with existing broker regulations and does not discriminate against the DeFi industry. The IRS…

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Filed under: News - @ December 28, 2024 1:22 pm