IRS targets DeFi brokers with new tax reporting rules set for 2027
The post IRS targets DeFi brokers with new tax reporting rules set for 2027 appeared on BitcoinEthereumNews.com.
The IRS is going after decentralized finance (DeFi) brokers with a vendetta. If left, starting in 2027, these brokers will be required to report every dime made in crypto sales. The new rules fall under section 6045 of the Internal Revenue Code and are part of this big push to extend traditional tax regulations to the crypto industry. So brokers, as defined under these updated laws, will have to submit detailed reports on customer transactions. A crackdown on non-custodial players These rules don’t just target centralized exchanges like Binance and Coinbase. Oh no, the IRS has its sights set on DeFi’s golden promise: decentralization. Smart contracts, automated platforms, and even non-custodial wallets (tools that let users stay in control of their private keys) aren’t safe anymore. The IRS has made up a new phrase, “digital asset middlemen,” to call non-custodial operators who play a role in crypto transactions. So basically, if you’re helping someone sell or exchange digital assets — even if you never touch their funds — you’re now considered a broker. This includes hosted wallet providers, decentralized payment processors, and even operators of digital asset kiosks. Whatever that even is. The Infrastructure Investment and Jobs Act of 2021 kicked this off, editing section 6045 to expand the definition of “broker.” It also introduced reporting requirements for cryptos, putting them on par with traditional securities. While these changes officially took effect in January, the final rules for DeFi participants were delayed until now. Gross proceeds reporting: What it means for DeFi Also, under these regulations, brokers will have to report “gross proceeds” from crypto sales. This includes the total amount received by a seller, regardless of expenses like transaction fees. For DeFi platforms that operate through smart contracts, this means creating systems to track and report every transaction. Because…
Filed under: News - @ December 27, 2024 8:26 pm